Insurance business and

finance
Purpose
At the end of this unit, candidates should be able to demonstrate an understanding of the operation of
insurance organisations in business and financial terms.

Assumed knowledge
It is assumed that the candidate already has knowledge of the fundamental principles of insurance as
covered in IF1 Insurance, legal and regulatory or equivalent examinations.

Summary of learning outcomes Number of questions

in the examination*

1. Understand the structure of the insurance industry 5

2. Understand the management of insurance businesses 3

3. Understand the main aspects of corporate governance 3

4. Understand the role of the various functions within insurance organisations 1

5. Understand accounting principles and practices and their application 6

6. Understand accounting standards and insurance company accounts 2

7. Analyse businesses using financial ratios 2

8. Understand the financial strength of insurance companies 3

9. Plus 25 case study-related questions from learning outcomes 1 to 8

* The test specification has an in-built element of flexibility. It is designed to be used as a guide for study and is not a statement of actual
number of questions that will appear in every exam. However, the number of questions testing each learning outcome will generally be within
the range plus or minus 2 of the number indicated.

Published February 2020

©2020 The Chartered Insurance Institute. All rights reserved. M92
 Important notes
• Method of assessment:
Mixed assessment consisting of two components, both of which must be passed. One component
is a coursework assignment and one is a multiple choice question (MCQ) examination. The details
are:
1. an online coursework assignment using RevisionMate consisting of 10 questions which
sequentially follow the learning outcomes. This must be successfully completed within 6 months
of enrolment; and
2. an MCQ exam consisting of 25 MCQs and 5 case studies followed by 5 MCQs each. 90 minutes
are allowed for this exam. This exam must be successfully passed within 18 months of
enrolment.
• This syllabus will be examined from 1 May 2020 until 30 April 2021.
• Candidates will be examined on the basis of English law and practice unless otherwise stated.
• Candidates should refer to the CII website for the latest information on changes to law and practice
and when they will be examined:
1. Visit www.cii.co.uk/qualifications
2. Select the appropriate qualification
3. Select your unit from the list provided
4. Select qualification update on the right hand side of the page

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©2020 The Chartered Insurance Institute. All rights reserved.
1. Understand the structure of the insurance 4.2 Describe the role of other functions within insurance
industry organisations, including:
1.1 Explain the different types of insurance company, • Internal audit.
including proprietary, mutual, captive, takaful and
reinsurance. • Legal and company secretarial.
1.2 Describe the Lloyd’s and London Market.
• IT and data management.
1.3 Describe the global perspective of the insurance
market. • Facilities management.
1.4 Explain the different types of stakeholder and their
interests.
• HR/training and competence.

1.5 Explain the different distribution channels for 5. Understand accounting principles and
insurance business.
practices and their application
1.6 Discuss the reasons for company growth, including
5.1 Explain the purpose and function of financial
mergers and acquisitions.
accounting.
1.7 Discuss the reasons for using external service
5.2 Distinguish between financial and management
providers, including benefits and drawbacks.
accounting.
2. Understand the management of 5.3 Describe the users of financial information and their
information requirements.
insurance businesses
2.1 Describe the role and responsibilities of the board of 5.4 Apply the basic financial concepts and the
directors and other senior executives. accounting equation.
2.2 Describe the key roles and responsibilities of 5.5 Describe accounting for receipts and payments.
managers, supervisors and non-managerial staff. 5.6 Interpret a balance sheet, a profit and loss account
2.3 Explain the importance of business planning, and a cash flow statement.
performance monitoring bugetary planning and 5.7 Explain the principles of management accounting.
control and decision making. 5.8 Interpret management accounting information.
2.4 Explain the importance and use of management
information and management reporting. 6. Understand accounting standards and
insurance company accounts
3. Understand the main aspects of 6.1 Outline the main accounting standards that affect
corporate governance insurance company accounts.
3.1 Describe the corporate governance framework and 6.2 Explain the importance of accurate claims reserving.
the incorporation of businesses.
6.3 Describe insurance company reserving method.
3.2 Describe the statutory reporting requirements.
3.3 Describe how risk can be managed within the 7. Analyse businesses using financial ratios
corporate governance framework. 7.1 Discuss the general uses and benefits of financial
3.4 Explain the importance of accurate record keeping ratios.
and reporting. 7.2 Interpret general accounts through the use of
3.5 Explain the importance of the management and financial ratios including:
protection of confidential data.
• Profitability.
4. Understand the role of the various • Productivity.
functions within insurance organisations
4.1 Explain the role and significance of insurance related • Liquidity.
functions within insurance organisations, including:
• Activity, including turnover.
• Underwriting, including delegated authority.
• Gearing.
• Claims. 7.3 Interpret insurance company accounts through the
use of financial ratios, including:
• Risk management.

• Compliance.
• Solvency.

• Actuarial, solvency and capital modelling.

• Liquidity.

• Sales and marketing/customer service.

• Profitability, including return on equity, gearing,
combined ratio, commission ratio.
• Investment. • Outstanding claims.
• Finance and treasury.

• Strategic planning.

Published February 2020 3 of 6

©2020 The Chartered Insurance Institute. All rights reserved.
8. Understand the financial strength of Reading list
insurance companies
The following list provides details of further
8.1 Explain the role of rating agencies and the rating
reading which may assist you with your
process.
studies.
8.2 Explain the regulatory solvency requirements and
how the financial strength of insurance companies is Note: The examination will test the
analysed. syllabus alone.
The reading list is provided for guidance only
and is not in itself the subject of the
examination.
The resources listed here will help you keep
up-to-date with developments and provide a
wider coverage of syllabus topics.
CII/PFS members can access most of the
additional study materials below via the
Knowledge Services webpage at https://
www.cii.co.uk/knowledge-services/.
New resources are added frequently - for
information about obtaining a copy of an
article or book chapter, book loans, or help
finding resources , please go to https://
www.cii.co.uk/knowledge-services/ or email
knowledge@cii.co.uk.

CII study texts

Insurance business and finance. London:
CII.
Study text M92.
Insurance, legal and regulatory. London: CII.
Study text IF1.
Books (and ebooks)
A practical guide to corporate governance.
5th ed. Mark Cardale. London: Sweet and
Maxwell, 2014.
Accounting and finance for non-specialists.
8th/10th ed. Peter Atrill and Eddie McLaney.
Pearson Education Ltd, 2013/2017. *
Accounting ethics. 2nd ed. Ronald Duska, et
al. Hoboken: Wiley-Blackwell, 2011.*
Accounting for non-accountants. 10th ed.
David Horner. Kogan Page, 2015.
Accounting principles. Jerry Weygandt, Paul
Kimmel and Donald Kieso. 10th ed.
Hoboken : Wiley, 2012.
Interpreting company reports and accounts.
10th ed. Geoffrey Holmes, Alan Sugden,
Paul Gee. Harlow, England: Pearson
Education, 2008.
Solvency II handbook: practical approaches
to implementation. Rene Dorf. London: Risk
Books, 2014.
The meaning of company accounts. Walter
Reid and D R Myddelton. Aldershot,
Hampshire: Gower, 2008.

* Also available as an ebook through Discovery via www.cii.co.uk/discovery (CII/PFS members only).

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©2020 The Chartered Insurance Institute. All rights reserved.
 The Financial Times guide to using and Insurance accounting (general business). Ian
interpreting company accounts. Wendy Hutchinson, updated by Alex Barnes.
McKenzie. 4th ed. Harlow, Essex: Pearson Risk control. Ian Searle.
Education, 2010. Risk identification. Ian Searle.
The Financial Times guide to using the Recent developments to Solvency II. Brad
financial pages. 6th ed. Romesh Vaitilingam. Baker.
Prentice Hall/Financial Times, 2011. Further articles and technical bulletins are
The valuation of financial companies: tools available at https://www.cii.co.uk/knowledge-
and techniques to value banks, insurance services/ (CII/PFS members only).
companies and other financial institutions.
Mario Massari, et al. Hoboken: Wiley, 2014.* Journals and magazines
* The Journal. London: CII. Six issues a year.
Archive available online at https://
Ebooks www.thepfs.org/search-results/?q=the
The following ebooks are available through +journal (CII/PFS members only).
Discovery via www.cii.co.uk/discovery Post magazine. London: Incisive Financial
(CII/PFS members only): Publishing. Monthly. Contents searchable
Accounting for non-accountants. 11th ed. online at www.postonline.co.uk.
David Horner. London: Kogan Page, 2017. Financial times. London: Financial Times.
Accounting standards: a comprehensive Daily. Available online at www.ft.com.
question book on international financial Access to further periodical publications is
reporting standards. 16th ed. H R B available from the Knowledge website at
Opperman, et al. Claremont: Juta and www.cii.co.uk/journalsmagazines
Company, 2015. (CII/PFS members only).
Basic financial accounting. 4th ed. Willen
Bosua, Madri Schute. Claremont: Juta and Reference materials
Company Ltd., 2015. Dictionary of insurance. C Bennett. 2nd ed.
Corporate governance and financial London: Pearson Education, 2004.
management: computational optimisation Concise encyclopedia of insurance terms.
modelling and accounting perspectives. Situ Laurence S. Silver, et al. New York:
Nuryanah, Sardar N M Islam. Basingstoke: Routledge, 2010.*
Palgrave McMillan, 2015. Harriman’s financial dictionary: over 2,600
Treatises on Solvency II. Meinrad Dreher. essential financial terms. Edited by Simon
Heidelberg: Springer, 2015. Briscoe and Jane Fuller. Petersfield:
Harriman House, 2007.*
Factfiles and other online resources
CII fact files are concise, easy to digest but
technically dense resources designed to
Exemplars
enrich the knowledge of members. Written Exemplar papers are available for all mixed
by subject experts and practitioners, the fact assessment units. Exemplars are available
files cover key industry topics as well as less for both the coursework component and the
familiar or specialist areas of general MCQ exam component.
insurance, life, and pensions and financial These are available on the CII website under
services, with information drawn together in the unit number before purchasing the unit.
a way not readily available elsewhere. They are available under the following link
Available online via www.cii.co.uk/ciifactfiles www.cii.co.uk/qualifications/diploma-in-
(CII/PFS members only). insurance-qualification.
The Insurance Institute of London (IIL)
These exemplar papers are also available on
podcast lecture series features leading
the RevisionMate website
industry figures and subject experts
( www.revisionmate.com) after you have
speaking on current issues and trends
purchased the unit.
impacting insurance and financial services.
Available online at https://www.cii.co.uk/
insurance-institute-of-london/ (CII/PFS
members only).

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©2020 The Chartered Insurance Institute. All rights reserved.
 Exam technique/study skills
There are many modestly priced guides
available in bookshops. You should choose
one which suits your requirements.
The Insurance Institute of London holds
a lecture on revision techniques for CII
exams approximately three times a year.
The slides from their most recent lectures
can be found at www.cii.co.uk/iilrevision
(CII/PFS members only).

Published February 2020 6 of 6

©2020 The Chartered Insurance Institute. All rights reserved.