LO1: Risk in Insurance
9%of exam
RiskPerilHazardPooling
LO2: Applying Risk Management
2%of exam
LO3: Main Features of Insurance
8%of exam
Risk TransferPremiumPolicyClaims
LO4: Insurance Market Structure
14%of exam
InsurersIntermediariesLloyd’sReinsurance
LO5: Contract and Agency
9%of exam
ContractAgencyAuthorityFormation
LO6: Insurable Interest
5%of exam
InterestTimingLifeMarine
LO7: Good Faith
11%of exam
CIDRAFair PresentationRemediesDisclosure
LO8: Proximate Cause
2%of exam
CausePerilsExclusionsChain
LO9: Indemnity
7%of exam
IndemnityAverageValuationSettlement
LO10: Contribution and Subrogation
4%of exam
ContributionSubrogationRecoveryOverlap
LO11: Regulatory and Legal Requirements
15%of exam
FCAPRAICOBSConsumer Duty
LO12: Consumer Protection and Disputes
6%of exam
FOSFSCSEligibilityRedress
LO13: Consumer Complaints
4%of exam
ComplaintResponseReferralDISP
LO14: CII Code of Ethics
4%of exam
IntegrityClient InterestsServiceFairness
Quick Facts
- Exam
- IF1 Insurance, Legal and Regulatory
- Format
- 100 compulsory four-option MCQs
- Time
- 2 hours
- Pass standard
- 70% moderated mark
- Marking
- No negative marking
- CII credit
- 15 for IF1; Certificate needs 40
- Study guidance
- 60 hours
- Blueprint
- 14 LOs; indicative allocations
- Jurisdiction
- English law unless stated
- Syllabus
- 2026 edition
Pure vs Speculative Risk
Pure
- Loss or no loss
- Generally insurable candidate
Speculative
- Gain or loss
- Ordinary investment exposure
Classify possible outcomes first
Risk Concepts
- Pure risk
- Loss or no loss
- Speculative risk
- Gain or loss possible
- Peril
- Event causing a loss
- Physical hazard
- Tangible loss-increasing circumstance
- Moral hazard
- Dishonesty increasing exposure
- Morale hazard
- Carelessness increasing exposure
- Frequency
- How often losses occur
- Severity
- Size of each loss
- Pooling
- Combine many similar exposures
Risk Cycle Memory
Identify, analyse, evaluate, treat, monitor
FindMeasurePrioritiseActReview
Risk Cycle
- Identify
- List exposures and triggers
- Analyse
- Estimate frequency and severity
- Evaluate
- Prioritise against risk appetite
- Avoid
- Stop the risk activity
- Reduce
- Lower likelihood or impact
- Transfer
- Shift defined financial consequences
- Retain
- Fund loss from own resources
- Monitor
- Reassess changing exposures
Insurance Mechanics
- Premium
- Price for agreed cover
- Policy
- Evidence of contractual terms
- Sum insured
- Selected maximum insured value
- Excess
- Insured bears initial amount
- Limit
- Maximum payable under wording
- Exclusion
- Defined cover restriction
- Claim
- Request for policy benefit
- Large numbers
- More exposures improve prediction
Broker vs Insurer
Broker
- Arranges client cover
- Authority depends on role
Insurer
- Accepts insured risk
- Pays covered claims
Identify who carries the risk
Market Roles
- Policyholder
- Contracts with insurer
- Broker
- Places cover for client
- Insurer
- Accepts insured risk
- Underwriter
- Selects and prices risk
- Reinsurer
- Insures insurer’s exposure
- Lloyd’s syndicate
- Members underwrite through syndicates
- Loss adjuster
- Investigates for insurer
- Loss assessor
- Represents claimant’s interests
- Co-insurance
- Several insurers share same risk
Contract Formation
Offer, accept, value, intent, capacity
OfferAcceptanceConsiderationIntentionCapacity
Contract and Agency
- Offer
- Proposed contractual terms
- Acceptance
- Unqualified agreement to offer
- Consideration
- Exchange of value
- Intention
- Legal relations intended
- Capacity
- Parties can contract
- Actual authority
- Principal expressly or impliedly grants
- Apparent authority
- Principal’s conduct creates appearance
- Agent’s principal
- Party bound within authority
Interest and Timing
- Insurable interest
- Recognised stake in preservation
- Mere hope
- Insufficient without legal relationship
- Life insurance
- Interest generally at inception
- Marine insurance
- Interest at time of loss
- Property insurance
- Check policy and applicable law
- Beneficiary
- Interest rules still require analysis
Consumer vs Business Disclosure
Consumer
- CIDRA 2012
- Reasonable care answering
Non-consumer
- Insurance Act 2015
- Fair presentation duty
Select legal regime before remedy
Disclosure Duty and Remedy
- Personal consumer buys cover→Apply CIDRA 2012(Reasonable care not to misrepresent)
- Business buys non-consumer cover→Apply Insurance Act 2015(Fair presentation of risk)
- Answer was deliberate or reckless→Assess statutory avoidance remedy(Check relevant statutory conditions)
- Answer was careless→Reconstruct underwriting decision(Apply proportionate statutory remedy)
- Insurer would decline risk→Check avoidance and premium return(Different rules by breach type)
- Insurer would alter terms→Apply hypothetical terms(Insurance Act or CIDRA schedule)
- Insurer would charge more→Apply premium proportion(Paid ÷ hypothetical premium)
- No qualifying breach established→No statutory avoidance remedy(Check relevant statutory conditions)
Disclosure Duties
- CIDRA consumer duty
- Reasonable care answering insurer
- CIDRA 2012
- Consumer misrepresentation framework
- Non-consumer duty
- Fair presentation before contract
- Insurance Act 2015
- Non-consumer disclosure framework
- Material circumstance
- Would influence prudent insurer
- Clear presentation
- Reasonably clear and accessible
- Deliberate qualifying non-consumer breach
- May avoid; refuse claims; retain premium
- Proportionate remedy
- Use underwriting counterfactual
Claim, Causation and Recovery
- Loss event has several causes→Find effective dominant cause(Chronology alone does not decide)
- Cause is insured peril→Check exclusions and conditions(Read complete causal chain)
- Cause is excluded peril→Inspect wording and concurrence(Avoid automatic payment)
- Policy is indemnity cover→Measure actual financial loss(Subject to limits and excess)
- Asset is underinsured→Check average clause(Apply insured ÷ actual value)
- Multiple policies overlap→Consider contribution(Same interest and peril)
- Third party caused loss→Consider subrogation(After insurer indemnifies insured)
- Fixed-benefit policy applies→Check agreed benefit(Indemnity rules may not apply)
Causation
- Proximate cause
- Dominant effective cause
- Time proximity
- Not decisive by itself
- Concurrent causes
- Check peril and exclusion interaction
- Excluded peril
- Inspect wording and causal chain
- Intervening event
- May break causal chain
Claim Logic
Cause, cover, loss, limit, recovery
CausePolicyIndemnityAverageSubrogation
Indemnity Principles
- Indemnity
- Restore pre-loss financial position
- Cash settlement
- Pay measured insured loss
- Repair
- Restore damaged property
- Replacement
- Provide equivalent property
- Reinstatement
- Restore insured subject matter
- Average
- Reduce payment for underinsurance
- Average formula
- Loss × sum insured ÷ value
- Agreed value
- Value fixed by policy terms
- Benefit policy
- Fixed benefit; indemnity may differ
Contribution vs Subrogation
Contribution
- Multiple liable insurers
- Share same indemnity
Subrogation
- Responsible third party
- Insurer uses insured rights
Ask: other policy or wrongdoer?
Recovery and Sharing
- Contribution
- Share overlapping indemnity liability
- Common interest
- Same insured interest required
- Common peril
- Same covered loss required
- Subrogation
- Insurer pursues insured’s recovery rights
- Indemnity first
- Recovery follows insurer payment
- Double recovery
- Insured cannot profit twice
FCA vs PRA
FCA
- Conduct across regulated market
- Prudential rules for FCA-only firms
PRA
- Designated firms’ safety
- Insurers’ prudential supervision
Some insurers are dual-regulated
Regulator and Remedy Route
- Insurance sales conduct issue→Check FCA and ICOBS(Include Consumer Duty where relevant)
- Designated insurer solvency issue→Check PRA prudential rules(FCA still covers conduct)
- FCA-only broker prudential issue→Check FCA rules(PRA designation is not universal)
- Client complains to operating firm→Start firm complaint process(Record and investigate)
- Eligible dispute remains unresolved→Consider FOS(Apply referral and act dates)
- Authorised firm has failed→Consider FSCS(Check insurance coverage category)
- Conflict threatens fair treatment→Manage and disclose conflict(Follow CII Code of Ethics)
- Current status uncertain→Verify FCA Register(Check permissions, not name alone)
Regulatory Map
- FCA
- Conduct and some prudential supervision
- PRA
- Prudential oversight of designated firms
- FCA-only broker
- FCA handles applicable prudential rules
- ICOBS
- Insurance conduct-of-business rules
- Consumer Duty
- Good retail customer outcomes
- Target market
- Product suits intended customers
- Value assessment
- Benefits justify overall price
- Financial promotions
- Fair, clear, not misleading
- FCA Register
- Check permissions and status
FOS vs FSCS
FOS
- Eligible firm complaint
- Dispute resolution and awards
FSCS
- Firm financial failure
- Category-specific compensation
Dispute or failed firm?
Protection Routes
- FOS
- Resolves eligible firm disputes
- FSCS
- Eligible claims after firm failure
- FOS award
- Date-dependent compulsory money cap
- Award period
- Referrals from April 2026
- 2026 recent-act cap
- £455k; acts from Apr 2019
- 2026 older-act cap
- £205k; acts before Apr 2019
- FSCS insurance
- Category-specific protection rules
- Ombudsman
- Not a prudential regulator
Complaint Path
- Complaint
- Dissatisfaction alleging loss or inconvenience
- Firm response
- Investigate under DISP timescales
- Final response
- State outcome and FOS rights
- Eight weeks
- Ordinary response referral trigger
- Six months
- Usually from firm’s final response
- Record keeping
- Evidence complaint and resolution
Ethical Pillars
Law, integrity, clients, service, fairness
ComplyIntegrityInterestsServiceFairness
Ethical Conduct
- Law and Code
- Follow applicable requirements
- Integrity
- Maintain highest ethical standards
- Client interests
- Act in best interests
- Service
- Provide high standard
- Fair treatment
- Treat people fairly
- Conflict
- Identify, manage, disclose appropriately
- Confidentiality
- Protect client information
Common Traps
Indicative blueprint
Indicative LO allocations ≠ Guaranteed live-form question counts
Pass mark
70% standard moderated mark ≠ Unchanging raw pass count
Qualification credit
IF1 earns 15 credits ≠ Certificate needs 40 total credits
Causation shortcut
Dominant effective cause ≠ Nearest event in time
Average shortcut
Average under applicable policy wording ≠ Automatic reduction in every policy
Disclosure regime
Consumer: CIDRA 2012 ≠ Non-consumer: Insurance Act 2015
Regulator shortcut
FCA oversees broker prudential rules ≠ PRA covers designated firms
Redress figures
FOS 2026 limits depend on dates ≠ FSCS limits depend on coverage category
Two recovery principles
Contribution: overlapping insurers ≠ Subrogation: third-party recovery
Last Minute
- 1.Classify pure versus speculative risk
- 2.Distinguish peril from hazard
- 3.Run identify–analyse–evaluate–treat–monitor cycle
- 4.Distinguish broker, insurer, reinsurer, Lloyd’s
- 5.Check offer, acceptance, consideration and authority
- 6.Apply insurable-interest timing by policy class
- 7.Select CIDRA or Insurance Act duty
- 8.Trace dominant effective cause and exclusions
- 9.Calculate average only under applicable wording
- 10.Separate contribution from subrogation
- 11.Assign FCA, PRA, FOS, FSCS correctly
- 12.Date-check FOS awards and FSCS category
- 13.Follow complaint referral route and timing
- 14.Apply all five CII ethical principles
Same family resources
Explore More CII Insurance Certifications
Continue into nearby exams from the same family. Each card keeps practice questions, study guides, flashcards, videos, and articles in one place.