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LM1 > 3: Main Classes of Business and Reinsurance > Flashcards

3: Main Classes of Business and Reinsurance Flashcards

1
Q

What are the main classes of business in the London Market?

A

Marine
Non-marine
Aviation

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2
Q

What are the main classes of business for Aviation insurance?

A

Airport operators
Physical damage
Aviation liability
Loss of licence

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3
Q

What are the main classes of business for Marine insurance?

A

Hull and yacht
Marine liability
Loss of earnings
Offshore energy
Cargo and goods in transit
War and strikes
Political risks (PRI)

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4
Q

What are the main classes of Non-marine business?

A

Property
Casualty
Intellectual property
Contingency
Business interruption
Bloodstock and livestock
Blackmail
Kidnap and ransom

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5
Q

What are the main classes of business for Property insurance?

A

Property
Construction
Cyber
Onshore energy
Pecuniary

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6
Q

What are the main classes of business for Business interruption insurance?

A

ALOP Advanced loss of profits
DSU Delayed start-up

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7
Q

What are the main classes of business for Casualty insurance?

A

Employer liability
Public liability
Professional liability = indemnity = PI
Motor liability
General liability
Products liability

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8
Q

Definition: Advanced loss of profits

A

A type of business interruption insurance which covers project overruns on construction projects

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9
Q

Definition: Contractors all risks insurance

A

Purchased by the main contractor on behalf of other sub-contractors to cover physical damage and liability

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10
Q

Definition: Short tail insurance

A

Business which has a short time lag meaning claims are generally swift to finalise

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11
Q

Definition: Long tail insurance

A

Business which has a long time lag meaning claims are generally lengthy to finalise

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12
Q

Definition: Liability insurance

A

Protect the insured against claims or lawsuits arising from damages or injuries caused to third parties.

Also known as third party insurance

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13
Q

Definition: Delay in start-up insurance

A

A type of business interruption insurance which covers delayed starts on construction projects

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14
Q

What is the difference between cargo and goods in transit insurance?

A

Cargo - physical damage insurance for the items being moved around

Goods - liability insurance for the person or organisation moving the items

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15
Q

What does upstream refer to in energy insurance?

A

The extraction of oil and gas, rather than distribution.

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16
Q

What does upstream refer to in energy insurance?

A

The extraction of oil and gas, rather than distribution.

17
Q

Definition: Physical damage insurance

A

Also known as first party insurance

18
Q

Definition: Reinsurance

A

A contract of insurance where the entity buying the policy itself is already an insurer

19
Q

What are the ways of buying reinsurance?

A

A single risk
A certain class of business
The whole portfolio
Catastrophe losses

20
Q

What are the benefits of purchasing reinsurance?

A

Increasing capacity
Smoothing peaks and troughs

21
Q

What are the benefits of writing reinsurance?

A

Accessing other geographical areas
Accessing other classes of business by ‘testing the water’

22
Q

Who might write reinsurance?

A

Specialist companies
Lloyds syndicates
Insurers

23
Q

Who might purchase reinsurance?

A

Insurers
Reinsurers
Captive insurers - one which only takes risks from its parent company
Mutuals - like-minded organisations who group together to form a pool

24
Q

Definition: Bordereau

A

Formatted spreadsheet which is used to present risk and claim info to reinsurers

25
Q

Definition: To cede

A

The act of sharing a risk with reinsurers

26
Q

Definition: Cedant

A

The original insurer who is passing the risk to reinsurers

27
Q

Definition: Cession

A

The share of the risk passed to reinsurers

28
Q

Definition: Collecting note

A

Document used to present the claim to reinsurers

29
Q

Definition: Facultative reinsurance

A

Reinsurance purchased for an individual risk, typically because it wouldn’t fit within another part of the reinsurance already available

30
Q

Definition: Non-proportional reinsurance

A

Reinsurance where the premium and claims do not have a direct correlation

31
Q

Definition: Proportional reinsurance

A

Reinsurance where the premium and claims are shared between insurer and reinsurer in pre-agreed proportions

32
Q

Definition: Reinstatement

A

When the cedant pays additional premium to bring a layer back to life in non-proportional reinsurance.

A premium must be paid for this

33
Q

Definition: Retrocedant

A

A reinsurer obtaining reinsurance for itself

34
Q

Definition: Retrocession

A

A cession where the entity ceding is already a reinsurer

35
Q

Definition: Treaty reinsurance

A

Reinsurance that can be purchased to cover a wider portfolio of risks.

36
Q

Definition: Retrocessionaire

A

A reinsurer accepting reinsurance from another reinsurer

37
Q

Definition: Stock throughout insurance

A

The combination of transit and storage insurance to remove loopholes

LM1 (9 decks)

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