3. Main classes of business written in the London market

Question 1

Explain Hull and yacht insurance

Answer 1

Physical loss or damage type insurance also known as first party or short-tail insurance

Question 2

Explain builder’s risk insurance

Answer 2

Type of marine insurance covering ship construction.

Physical damage and liability cover

Question 3

What are pecuniary insurances?

Answer 3

Monetary loss insurances

Money insurance - risk to valuable documents or money

Fidelity guarantee - fraud during the policy period

Question 4

What are key construction insurances?

Answer 4

Contractors all risk (CAR)
Erection all risk (EAR)

Question 5

What is bloodstock insurance and livestock insurance?

Answer 5

Bloodstock - horses / racehorses

Livestock - Other animals

Question 6

Contingency insurance

Answer 6

event cancellation / weather related insurance / prize indemnity / death and disgrace and over-redemption

Question 7

3 features of kidnap and ransom insurance

Answer 7

Payment of ransom
Payment of medical expenses for the captured person once release
Provision of a negotiation team

Question 8

Types of aviation insurance

Answer 8

Physical damage
Aviation liabilities
Loss of license / loss of use insurance - replacement income stream, after a waiting period
Airport operators (premises, product, hangar keeper - liabilities)

Question 9

Bordereau

Answer 9

Formatted spreadsheet on which risk and claim information can be presented to reinsurance - typical for treaty reinsurance

Question 10

To cede

Answer 10

Sharing risk with reinsurer (cedant is original insurer)

Question 11

Collecting note

Answer 11

The document use to present the claim to reinsurers under an excess of loss contract

Question 12

Facultative reinsurance

Answer 12

Reinsurance for an individual risk

Question 13

Non-proportional reinsurance

Answer 13

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

Premium set more in line with a direct insurance

Known as vertical protection (excess of loss)

Question 14

Proportional reinsurance

Answer 14

Premium and claims are shared between insurer and reinsurer in pre-agreed proportions

Question 15

Reinstatement

Answer 15

Bring excess of loss ‘back to life’ through additional premium

Known as horizontal protection

Question 16

Reinstatement premium

Answer 16

Price to reinstate or bring the layer back to life

Question 17

Retrocedant

Answer 17

Reinsurer obtaining reinsurance

Question 18

Retrocession

Answer 18

Cession where the entity ceding is already a reinsurer

Question 19

Retrocessionaire

Answer 19

Reinsurer accepting reinsurance from an entity

Question 20

Treaty reinsurance

Answer 20

Reinsurance for a portfolio of risks (class or whole book)

Question 21

Over redemption

Answer 21

Over redemption of promotional materials (that would result in a loss)

Question 22

Personal accident

Answer 22

Covers insured against accidental injury - benefits policy

Question 23

Personal accident and illness / sickness

Answer 23

Personal accident + sudden onset illnesses

Question 24

Contractors all risk (CAR)

Answer 24

Single insurance policy for all contractor risks in a large project - can be blended physical damage and liability

Question 25

3 types of property insurance

Answer 25

Buildings Machinery Stock

Question 26

Non marine liability

Answer 26

Directors and officers Errors and omissions / professional indemnity / negligence Public liability Products liability Employers liability General liability - encompasses most of the above classes

Question 27

Financial guarantee

Answer 27

Any contract of insurance where the insurers agrees on the occurrence of an event to pay out as agreed - Financial failure - Lack of support from financial supporters - Changes in interest rates - Changes in property values - Changes in rates of exchange

Question 28

Extortion / malicious tamper / contamination

Answer 28

Protects against * Checking and removing potentially unsafe goods as soon as possible. * Maintaining brand image. * Making sure that alternative goods are available for clients. * Maintaining client confidence (which helps its brand image as well).

Question 29

Political Violence

Answer 29

- Terrorism - Sabotage - RSCC - Malicious damage - Insurrection - Mutiny - War / civil war

Question 30

Aviation Physical damage

Answer 30

Physical damage to aircraft Property insurance for airport buildings Drone aerial vehicle insurance

Question 31

Aviation liability

Answer 31

Airline liability insurance (3rd party non passenger) Passenger liability Airport operator liabilities - premises, hangar keepers, products