Coldstream Insurance plc

This is a newly formed insurance company – a subsidiary of one of the major banks. It started operations just over two years ago, concentrating on three particular branches of insurance. The bar charts shown here indicate the main cash inflows and outflows over its first two years.

As a trainee supervisor you have been asked to draft a brief report (up to 150 words) to Ms Jennifer Smith, Senior Training Officer explaining how the company's different branches of insurance have fared in their first two years on the evidence of the diagrams below.

Section D. Complete the table

verb	adjective	noun
to insure	insurable	insurance
to indemnify
	calculable
		expectation
to diversify
	proposed
		adjuster
to invest
	comprehensive
		maturity
to renew
	different
	dependant
to retire
	successful
		conversion
to satisfy
	specific
		protection
to concentrate
	specialized
		consideration
to speculate
	expired
to continue
	investigative
		consolidation
to classify

Section E. Reply to a letter

You are employed by Coldstream Insurance and have received the following letter from a potential client. Draft a suitable reply.

13 High Reach Chester BL19 5VX Date:

The Manager, Coldstream Insurance PLC Boddington House Chester BL1 1EE Dear Sir or Madam,

I have received a life proposal form from your office with a request that I complete the document as soon as possible and return it to you. After reading through the document I find the questions about my private life to be impertinent. For instance, you ask:

1. What is my occupation? What has that got to do with my application for a life policy? Does it matter whether I am a milkman or a lorry driver?

2. Am I likely to live or work abroad? How can I answer that question? Yes, if I get the right opportunity I will go abroad. Would your reply be any different?

3. Do I smoke? If so, how many a day? What is my daily consumption of alcohol? What is my height? And my weight?

Frankly I find all this probing into my private life grossly offensive. All I want is a £1,000 policy on my life. Do you really need to ask all those silly questions?

Yours faithfully

William Rivers

Section F. Summarising

Give the following passage an appropriate title and summarise it in Russian in about 150 words.

There are two parties to an insurance contract, the insurer (usually an insurance company) and the insured (the person whose life or property is being covered against loss). Complete honesty is essential if the insurance contract is going to be enforced against the insurer. If the insurer has held back any information which would affect the willingness of the insurer to accept the risk, then the insurer may escape from liability when a claim is made under the policy. Utmost good faith is one of the principles of insurance. Suppose, for example, that Michael insures his business premises for £100,000 with Coldstream Insurance. In the proposal form he was asked whether any inflammable materials were stored on the premises. He said «no». As a result of a fire which later gutted the premises it was discovered that a ground floor storeroom was used to store drums of petrol. Because he failed to disclose this on his proposal form, Coldstream Insurance may avoid the claim.

Another fundamental rule is that there must be insurable interest. This means that any person taking out an insurance policy must be in a position to suffer a direct loss if the event insured against happens. So if Michael wants to insure his house against fire damage he can do so, but if I want to insure his house, since I would lose nothing if it burned down, I cannot do so. If it were otherwise, there would be a danger that unscrupulous people would insure strangers' houses, burn them down, then claim the insurance. It would be a charter for arsonists.

Another axiom of insurance is indemnity*. The effect of this principle is that you cannot expect to make a profit out of the insurance contract. Consider first the case where Michael takes out a policy to cover his house against fire. The premium is ₤2.50 per ₤1,000 of cover. He reckons his house is worth £100,000 so he takes out cover for that amount, paying £250 premium per annum. Subsequently there is a fire and the house burns to the ground. An architect is consulted and it is estimated that it will cost

£150,000 to reconstruct the house as it was before the fire. The insurance company will only contribute £100,000 to the cost of rebuilding.

The question of indemnity does not apply to life assurance of course, because no-one can say how much a human life is worth. If a life is insured for £100,000 that is how much will be paid out on the death of the insured.

Section G. Join the halves

On the left of the page are the first halves of sentences. On the right are the second halves of the sentences, though not in the same order. Pair the halves and then write your own list of the completed sentences.

Days of grace refer to the limited period after termination		having developed from an eighteenth-century coffee-house in the heart of the City.
Lloyd's of London are the great marine insurers		offering cover against theft and burglary
For an insurance claim to be valid there must be a financial loss		enabling their clients to find the cheapest and most effective cover.
Whole life assurance means that the sum assured is		during which non-payment of the premium is accepted.
With endowment assurance you are able to save for the future while		the insured must complete a claim form.
A proposer is a person who has completed a proposal form and is		payable only when death occurs.
Before an insurance claim can be met there must be a financial loss and		waiting for it to be accepted by the insurance company.
Aviation insurance is		providing safe working conditions for his employees.
Employers' Liability policies cover the employer's responsibility for		becoming increasingly important as air traffic and freight grows.
A fidelity guarantee policy is aimed at		resulting from a peril covered by the contract.
The crime rate will be of particular interest to companies		protecting employers against the potential dishonesty of employees.
Insurance brokers play a useful role		insuring your life at the same time.

Section H. Missing words

There are a number of missing words in the following passage. You are asked to find appropriate words to complete the text.

A married man with a wife and children is well advised to insure his..............................so that, if her were to die, his family would be..............................and provided for. This is especially important if he has debts, such as a mortgage or a..............................loan. A life assurance policy can also prove to be an excellent way of saving for the future. The endowment policy..............................that if you live until the policy comes to an end you will receive back all the..............................you have paid, together with interest, in one lump sum. This can be a..............................nest-egg for later life. Many people use this form of saving to prepare for the time when they retire. Retirement almost invariably brings with it a..............................in income, and the lump sum paid over by the insurance company can be used to invest in stocks and shares or a building society* to boost one's..............................of living. The lump sum could also be used to pay an annuity, which is the same as having an..............................pension for the rest of your life.

Section I. Multiple choice

Choose the word which best completes each sentence.

1. Life expectancy is the length of time a person is .............................. to live for.

   1. going;

   2. likely;

   3. bound.

2. The life fund is a pool of money into which all the premiums are paid and from which all ………………. are eventually paid out.

   1. loans;

   2. savings;

   3. benefits.

3. The greater the risk or the chance of it happening, the .............................. will be the premium needed to cover it.

   1. higher;

   2. lower;

   3. cheaper.

4. The .............................. date is the date in the future when the policy comes to an end.

   1. fixed;

   2. official;

   3. maturity.

5. Insurance makes trading easier by .......................... a variety of risks.

   1. eliminating;

   2. describing;

   3. ensuring.

6. Risks must be..............................before they can be insurable.

   1. understood;

   2. unexpected;

   3. calculable.

7. It can be .............................. with reasonable accuracy how many houses in Britain will be destroyed by fire next year.

   1. predicted;

   2. indicated;

   3. emphasized.

8. A £100 excess clause in a motor policy indicates that the .............................. will have to pay the first £100 of any loss incurred.

   1. insurer;

   2. insured;

   3. underwriter.

9. When a householder is calculating the value of his house for .............................. insurance purposes, he or she should deduct the value of the land.

   1. life;

   2. marine;

   3. fire.

10. A company dealing with motor insurance would be .............................. by a long bout of very cold weather.

    1. unaffected;

    2. dismayed;

    3. delighted.

Section J. Explanations

Explain carefully the meanings of the highlighted phrases in these sentences.

1. In dealing with an insurance company the insured is presumed to have acted in utmost good faith*.

2. A cover-note is a document giving temporary cover while the formal policy is being prepared.

3. When you insure your house against burglary it may not be burgled but, if it is, you will be indemnified.

4. The premium paid for life assurance is based on the assured's expectation of life.

5. The life offices (or life assurance companies) pay out benefits to policy holders or their dependants.

6. The life fund is a great pool of money from which the payments (or benefits as they are called) are eventually paid out.

7. The first step in an insurance contract is usually the completion of a proposal form by the person seeking cover.

8. An underwriter needs to know the material facts in order to calculate the extent of the risk and the amount of the premium.

Section K. Vocabulary

lapse	annuity	actuary	renewal	confirmation
excess	cover-note*	premium	underwriter	indemnity
claim	broker	adjuster	comprehensive	syndicate
insured	insurer	cancellation	catastrophe	fidelity*

Match the meanings shown below to the words in the table above.

1. Something which would cause an insurance substantial losses.

2. What a policy does when the premium is not paid.

3. The policy is due for this when the period of insurance runs out.

4. An acknowledgement that a policy is in force.

5. Like a pension it provides for a sum of money to be paid at regular intervals to the policy holder.

6. The type of insurance policy which protects an employee against the dishonesty of his employees.

7. Someone who advises and arranges policies that are offered by many different companies.

8. A group of underwriters at Lloyd's of London.

9. The extent of a loss to be borne by the insured.

10. The type of policy which offers cover against a variety of risks.

11. A document giving temporary cover while the formal policy is being prepared.

12. The person who has an insurance policy – also called the policy holder.

13. The organisation which provides insurance cover.

14. The person who applies the mathematical doctrine of probabilities to insurance problems.

15. The principle that anyone who suffers a loss should be fully compensated for the loss incurred.

16. The act of terminating a policy because it is no longer required.

17. What needs to be made when a loss is incurred.

18. The payment made to the insurance company when the proposal is accepted.

19. The person who assesses the loss after a claim has been made.

20. Another name for the insurer.

Section L. Proposal form

Here is a specimen life proposal form. First translate the form. Then complete it as if you are personally taking out a with profits endowment with Stockminster for a term of ten years.

The sum to be assured is £5,000.