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| Question | Answer |
| Group Risk Schemes are made available for a variety of reasons | 1.) Attract & retain staff 2.) Competition from other employers 3.) Paternalism 4.) Relative value 5.) Tax efficiency |
| Larger Companies may be in a position where they feel insurance is unnecessary because... | 1.) They can absorb the cost of all but the most extreme claim patterns 2.) They employe enough staff to make a reasonable prediction as to what their future claims will be from looking at claims that have occurred in the past. |
| Advantages of self-insurance | 1.) The margins that insurers build into their premiums to cover their costs are avoided. 2.) Insurers set their premium rates based on their experience of the market as a whole - could be paying for other companies' poor experience. 3.) Insurance tends to run in cycles where premiums rise and fall over periods of years - self insurance avoids this volatility. |
| Disadvantages of self-insurance | 1.) If an incorrect assumption about the likely number of future claims it may run into difficulty. 2.) Even if the claims experience has been interpreted correctly if a catastrophic event leads to a sudden, unexpected surge in claims it could run into trouble. 3.) The company may not be able to take advantage of the exemption from the Employment Equality (age) Regs that apply to insured Group Schemes. |
| Captive Insurance Company | An insurance company that exits solely (or at least primarily) to handle the risks of its parent. |
| Advantages of Captive Insurance Companies | 1.) Captives are treated in much the same way as commercial insurance companies for tax purposes - VAT exempt. 2.) Often situated in territories where the tax treatment is better than in the UK. 3.) Premiums receive by the captive can earn investment income for the group. 4.) Premiums paid by the parent may be eligible for tax relief as a business expense. 5.) Some risks would not be accepted or only at a high cost by a commercial insurer. 6.) They can obtain reinsurance whose rates are lower that primary insurers. |
| Association of British Insurers (ABI) | - Trade association for insurance companies in the UK. - Represents the interests of its members across all classes. - Membership is not compulsory. - Members are bound by the ABI's codes of conduct, guidelines and Statements of Best Practice. |
| Investment & Life Assurance Group (ILAG) | - Advancing the interests of providers and distributors of life, health, pension and investment products in the UK. - Membership is open to any practitioner within the industry. - Does NOT bind its members to follow specific practices. - Makes submissions in response to or proactively to issues. |
| Association of Professional Financial Advisors (APFA) | - Voice of the financial advisor. - Promotes the value of financial advice and the interests of financial advisors. - Represents the interests of their membership to the regulator and policy makers who have an impact on the financial advisor market. |
| Group Risk Development (GRiD) | - Activities are similar to ILAG's but interested solely in Group Risk business. - Collective voice of insurers, reinsurers and intermediaries in the Group Risk Market. |
| Prudential Regulation Authority (PRA) | Companies that are authorised by the PRA write business in the UK can also write business in the EU as the PRA has attested to the financial soundness of the company. |
| Barriers to UK companies doing business in the EU from the UK | - Need to satisfy local regulations and requirements for other matters such as general business and advertising standards. - Language and cultural differences. - Differences in contract law and taxation. |
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