3: Main Classes of Business and Reinsurance Flashcards
What are the main classes of business in the London Market?
Marine
Non-marine
Aviation
What are the main classes of business for Aviation insurance?
Airport operators
Physical damage
Aviation liability
Loss of licence
What are the main classes of business for Marine insurance?
Hull and yacht
Marine liability
Loss of earnings
Offshore energy
Cargo and goods in transit
War and strikes
Political risks (PRI)
What are the main classes of Non-marine business?
Property
Casualty
Intellectual property
Contingency
Business interruption
Bloodstock and livestock
Blackmail
Kidnap and ransom
What are the main classes of business for Property insurance?
Property
Construction
Cyber
Onshore energy
Pecuniary
What are the main classes of business for Business interruption insurance?
ALOP Advanced loss of profits
DSU Delayed start-up
What are the main classes of business for Casualty insurance?
Employer liability
Public liability
Professional liability = indemnity = PI
Motor liability
General liability
Products liability
Definition: Advanced loss of profits
A type of business interruption insurance which covers project overruns on construction projects
Definition: Contractors all risks insurance
Purchased by the main contractor on behalf of other sub-contractors to cover physical damage and liability
Definition: Short tail insurance
Business which has a short time lag meaning claims are generally swift to finalise
Definition: Long tail insurance
Business which has a long time lag meaning claims are generally lengthy to finalise
Definition: Liability insurance
Protect the insured against claims or lawsuits arising from damages or injuries caused to third parties.
Also known as third party insurance
Definition: Delay in start-up insurance
A type of business interruption insurance which covers delayed starts on construction projects
What is the difference between cargo and goods in transit insurance?
Cargo - physical damage insurance for the items being moved around
Goods - liability insurance for the person or organisation moving the items
What does upstream refer to in energy insurance?
The extraction of oil and gas, rather than distribution.
What does upstream refer to in energy insurance?
The extraction of oil and gas, rather than distribution.
Definition: Physical damage insurance
Also known as first party insurance
Definition: Reinsurance
A contract of insurance where the entity buying the policy itself is already an insurer
What are the ways of buying reinsurance?
A single risk
A certain class of business
The whole portfolio
Catastrophe losses
What are the benefits of purchasing reinsurance?
Increasing capacity
Smoothing peaks and troughs
What are the benefits of writing reinsurance?
Accessing other geographical areas
Accessing other classes of business by ‘testing the water’
Who might write reinsurance?
Specialist companies
Lloyds syndicates
Insurers
Who might purchase reinsurance?
Insurers
Reinsurers
Captive insurers - one which only takes risks from its parent company
Mutuals - like-minded organisations who group together to form a pool
Definition: Bordereau
Formatted spreadsheet which is used to present risk and claim info to reinsurers
Definition: To cede
The act of sharing a risk with reinsurers
Definition: Cedant
The original insurer who is passing the risk to reinsurers
Definition: Cession
The share of the risk passed to reinsurers
Definition: Collecting note
Document used to present the claim to reinsurers
Definition: Facultative reinsurance
Reinsurance purchased for an individual risk, typically because it wouldn’t fit within another part of the reinsurance already available
Definition: Non-proportional reinsurance
Reinsurance where the premium and claims do not have a direct correlation
Definition: Proportional reinsurance
Reinsurance where the premium and claims are shared between insurer and reinsurer in pre-agreed proportions
Definition: Reinstatement
When the cedant pays additional premium to bring a layer back to life in non-proportional reinsurance.
A premium must be paid for this
Definition: Retrocedant
A reinsurer obtaining reinsurance for itself
Definition: Retrocession
A cession where the entity ceding is already a reinsurer
Definition: Treaty reinsurance
Reinsurance that can be purchased to cover a wider portfolio of risks.
Definition: Retrocessionaire
A reinsurer accepting reinsurance from another reinsurer
Definition: Stock throughout insurance
The combination of transit and storage insurance to remove loopholes
