5 - Structure of the London Market

Question 1

What is the name of the entity responsible for the management and supervision of the Lloyds market?

Answer 1

The council of Lloyd’s.

Question 2

What makes up the council of Lloyd’s?

Answer 2

3 working members
3 external members
9 nominated members

Question 3

What is the name given to groups of private individuals or corporate investors who carry risks?

Answer 3

Syndicates - both types known as underwriting members or ‘names’

Question 4

For how long does a syndicate exist to accept risks?

Answer 4

One year

Question 5

What is the role of a managing agent?

Answer 5

Employed by syndicate to manage and employ underwriters to accept risk

Question 6

What is R&R - Reconstruction and Renewal?

Answer 6

When Lloyd’s reinsured the entire 1992 year of account into Equitas, their new reinsurance vehicle, to create a clean slate.

Question 7

What is the name used for investors in the Lloyds market who are also commercial organisations in their own right?

Answer 7

Corporate capital

Question 8

If a Lloyd’s Name feels that they have been badly advised, who will they be complaining about?

Answer 8

The Member’s Agent

Question 9

What term is given to a company wishing to transact business in the London market?

Answer 9

Insurance undertakings

Question 10

What are examples of Non-Lloyds insurers?

Answer 10

1. Limited liability companies
2. Mutuals
3. Captives

Question 11

What is the name of an insurer that only accepts risks from ‘sister organisations’ in the same group?

Answer 11

Captive Insurer

Question 12

What is the function of the Lloyds market association?

Answer 12

Provide representation, information and technical service to underwriters

Question 13

What does IUA stand for?

Answer 13

The International Underwriting Association

Question 14

What are the priorities of the IUA?

Answer 14

1. Enhancing business efficiency
2. Maintaining dialogue with broking community
3. Supporting underwriting and technical committees

Question 15

Give four reasons why business comes to the London market.

Answer 15

1. Capacity
2. Entrepreneurial spirit
3. Good claims service using knowledgeable personnel
4. History and experience

Question 16

If an underwriter quotes a premium of £5000 and allows brokerage of 25%, how much is paid to the underwriter?

Answer 16

£3750

Question 17

Who receives premium from the client?

Answer 17

The broker, who then pays the insurer

Question 18

What is the name for investors in the Lloyds market?

Answer 18

Members

Question 19

What is meant by the term ‘premium income limit’?

Answer 19

A measure of the size of the insurer based on how much business it can accept in a year.

Question 20

Which type of insurer typically specialises in risks such as shipowners’ liability?

Answer 20

Mutual indemnity association

Question 21

Which main body represents brokers operating in the London market?

Answer 21

LIIBA

Question 22

What is a P&I club?

Answer 22

A mutual organisation formed by a group of individuals who collectively require the same insurance.