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Insurance > 2. Lloyd's and Insurance Market > Flashcards

2. Lloyd's and Insurance Market Flashcards

1
Q

When do intermediaries not need to be authorised

A

If EU passporting applies

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2
Q

How many limbs to Fit and Proper test

A

3

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3
Q

Do brokers have to complete Lloyd’s accreditation process

A

No

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4
Q

What is the only Article for which there are applicable exclusions under FSMA

A

Article 10

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5
Q

If insurer UW risk in different country, what must they ensure?

A

Licensed in accordance w/ local laws

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6
Q

What is a broker

A

A of insured w/ specialist knowledge

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7
Q

What is an excess

A

Sits under policy limit, paid by insured - if within excess, policy not triggered

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8
Q

327 FSMA states what exemption

A

No need for authorisation if work incidental

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9
Q

What is an ‘authorised person’ for FSMA?

A

Lloyd’s syndicate

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10
Q

Who regulates the intermediaries in Lloyd’s?

A

FCA

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11
Q

What is the ‘approved person’ regime?

A

Approval by FCA to perform 1+ controlled functions on behalf of ‘authorised person’

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12
Q

What is a regulated activity

A

Specified Activity and Specified Investment

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13
Q

Who are subject to compulsory J of Financial Ombudsman

A

Insurers

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14
Q

Why are spent convictions under ROA still considered for Fit and Proper test

A

ROA (Exceptions) Order requires disclosure for certain positions

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15
Q

What is acceptance on subscription market

A

Scratching placing slip

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16
Q

What will the FCA consider if criminal record

A

Nature of crime - e.g. basis of theft is dishonesty

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17
Q

How many links in the Chain of Security?

A

Three

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18
Q

What is considered for ‘Competence’ in Fit and Proper test

A

Qualifications

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19
Q

What is an insurance tower

A

Risk spread out in layers

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20
Q

What two entities regulate insurance Cs and Lloyd’s entities

A

FCA + PRA

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21
Q

What is Solvency II

A

Aimed at consumer protection + enhancing competition through three pillars

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22
Q

What are the sanctions under 23 FSMA

A

Criminal - imprisonment and/or fine

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23
Q

What is the ‘subscription market’?

A

Risk is shares between insurers, and premium pro-rated

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24
Q

Two biggest areas of Lloyd’s

A

Property and casualty

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25
Q

Third limb to Fit and Proper test

A

Financial soundness

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26
Q

What do brokers use for contract certainty on subscription market

A

Checklist to ensure satisfying Contract Certainty principles, and Market Reform Contract for standardised slip

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27
Q

What powers do Council of Lloyd’s have for breach of its byelaws

A

Enforcements Ps and impose a range of sanctions (from fines to bans)

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28
Q

Three kinds of intermediaries at Lloyd’s

A

Managing A, coverholders and brokers

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29
Q

What happens on subscription market if later insurer changes terms?

A

Only applicable to that insurer

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30
Q

How is there internal regulation at Lloyd’s

A

Byelaws created by the Council of Lloyd’s

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31
Q

What Principles/Rules are applicable for PRA

A

8 Fundamental Rules

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32
Q

What happens if 19(1) FSMA still applies

A

Need FCA authorisation

33
Q

What contains vetted policy wording that can be incorporated by mere ref to relevant clause in slip

A

Lloyd’s Wordings Repository

34
Q

What Principles/Rules are applicable for FCA

A

11 Principles for Business

35
Q

What is the nature of all names admitted to Lloyd’s - LLC, unlimited etc.

A

Limited + severally liable

36
Q

What are ‘Funds at Lloyd’s’ in the CoS

A

Names provide capital calculated by syndicate’s business risk, held in trust

37
Q

What case showed that insured has separate Cs w/ each insurer on a subscription market

A

General Reinsurance

38
Q

Second link in Chain of Security

A

Funds at Lloyd’s

39
Q

Possible exemption for 19(1) FSMA

A

327 FSMA

40
Q

Four specified activities (number)

A

10, 56, 57, 58

41
Q

Who provides claims handling services for Lloyd’s?

A

XChanging

42
Q

Upside of Solvency II

A

Permits continued EU passporting after Brexit

43
Q

What three things must approved persons do to become approved persons

A

Meet Fit and Proper test, comply w/ APER + COPs, and report anything that may affect ongoing suitability

44
Q

General rule under FSMA

A

19(1) General prohibition against carrying out RA unless authorised or exempt

45
Q

What is an example of a controlled function for 59 FSMA

A

D of syndicate

46
Q

What is a downside of Solvency II

A

Onerous capital requirements

47
Q

What are managing As

A

Managing day-to-day of the syndicate

48
Q

What are ‘Syndicate Level Assets’

A

Sufficient reserves held by each syndicate in trust.

49
Q

First link of Chain of Security

A

Syndicate Level Assets

50
Q

What is the FOS

A

Consumers + small businesses can complain to FOS for free, or pays compensation if authorised firm unable

51
Q

What is the ‘Central Fund’

A

Annual contributions from Names + subordinated debt

52
Q

What is a coverholder

A

MAs delegate authority to UW to other C/P - that C/P = coverholder

53
Q

Does the FOS apply for commercial (re)insurance?

A

No

54
Q

What is a ‘Follow the Leader’ clause?

A

Followers bound by lead’s decisions on claim liability + quantum

55
Q

First limb to Fit and Proper test

A

Honesty

56
Q

How do brokers become permitted to conduct business at Lloyd’s

A

Meet high standard of business conduct, agree TOBA w/ each MA it wishes to deal w/, and MA satisfied broker meets Lloyd’s standards

57
Q

Where is the Fit and Proper test

A

FCA Handbook FIT 2.1 - 2.3

58
Q

Who are followers on a subscription market

A

Those that UW business below the lead UW on the placing slip

59
Q

In subscription market, who usually negotiates policy wording and premium, and controls claims handling?

A

Lead UW

60
Q

Aim of FCA regulation

A

Protect consumer

61
Q

What is a deductible

A

Deducted from claim payment, so that the sum insured is actually less the deductible

62
Q

What requires a person to be an approved person to carry out controlled functions?

A

59 FSMA

63
Q

Where are the sanctions for breaching 19(1) FSMA

A

23

64
Q

Why does Lloyd’s have a Chain of Security?

A

Helps to support market confidence

65
Q

General Reinsurance showed what?

A

Insurance has separate Cs w/ each insurer on a subscription market

66
Q

If one percentage is to stand, what do you do before signing down

A

Subtract from % of total risk available

67
Q

What is considered for ‘Honesty’ in Fit and Proper test

A

Criminal record, and if D of now insolvent C

68
Q

What is an offer on the subscription market

A

Presentation of slip to UW

69
Q

Where is 50% of Lloyd’s business from (what J?)

A

US + Canada

70
Q

What is the Lead UW

A

Usually the UW at the top of the placing slip

71
Q

What part of FSMA defines regulated activity

A

22

72
Q

Two specified investments (number)

A

75 and 86

73
Q

Second limb to Fit and Proper test

A

Competence

74
Q

Third link in CoS

A

Central Fund

75
Q

What is the formula to sign down

A

(% of total risk available / % of total risk wanted) x % wanted by individual UW

76
Q

What is signing down?

A

More than 100% of risk UW, so each percentage taken by insurer is signed down

77
Q

Two possible exclusions for Article 10 FSMA

A

11 and 12 (EEA insurance + vehicle breakdown cover)

78
Q

What is a signing slip

A

Produced after all risk UW to tidy up placing slip

79
Q

When can a percentage of risk not be signed down

A

UW said percentage ‘to stand’

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