5. Structure of the London Market Flashcards
Definition: Captive insurers
Solely insure the risk from sister companies
Definition: Contract certainty
Requires all parties involved to know exactly what the terms are before inception.
This is achieved through the Market Reform Contract MRC (known as ‘slip’), which defines the term and conditions of the risk
Definition: Council of Lloyds
Responsible for the management and supervision of the Lloyds market
Definition: Limited liability company
The most common format of non-Lloyds insurer
Definition: Lloyds of London
Not an insurer itself, but a Society of members which forms a marketplace, providing structure and regulation for organisations working in it
International in the sources of capital and customer base
Definition: Managing agent
Performs the day-to-day operational functions of a syndicate, as the syndicate is just an amalgamation of different investors
Definition: Managing general agent (MGA)
An organisation which has the authority to accept risks or agree claims on behalf of the insurer.
These can be larger in income than the insurers theirselves
Definition: Members’ agent
Advise members (names) as to their investment
Definition: Mutual companies
Owned by the policy holders, serving a specific interest group (National Farmers Union - NFU)
All profits are retained within the company, returned to the policyholder as dividend, or as reduced future premiums
Definition: Mutual indemnity associations
Similar to syndicates and managing agents - groups of like minded customers who look together to create their own insurance pool, and organise professional managers to run the business.
An example would be the protection and indemnity associations set up to handle marine liability
Definition: Names
The individuals or corporate investors within a syndicate.
Also known as members
Definition: Open years management
When an agreement cannot be reached to reinsure the liabilities of any syndicate year account, so it is left open until more clarity can be obtained to complete an RITC exercise
Definition: Reinsurance to close (RITC)
When outstanding liabilities are reinsured at the end of a year (when a syndicate is forced to close), by the syndicate’s next year of account.
If an agreement cannot be reached, open years management must occur
Definition: Society of Members
Lloyds of London is a society of members made up of the following groups
Working members - a member of the Society of Lloyd’s who is actively working in the Lloyds market
External members - a member of the Society of Lloyd’s who is not actively working in the Lloyds market
Nominated members - not a member of the society
Definition: Syndicates
Group of private individuals or corporate investors who carry the risks in Lloyd’s of London.
The individuals or investors are known as Names
Can only exist for one year
