Business Conducted In The London Market Flashcards
Name the key documents presented to insurers
-Proposal forms
-Presentations
-Market Reform Contract
-Core Data Record and iMrc
-Endorsement
What are legal issues for insurers using proposal forms?
Forms ask specific questions and details.
If missing question, insurer would struggle to argue non-disclosure in court.
Why is the Market Reform Contract the most popular?
-Standardised document
-Complies with contract certainty
-Electronic submission
What is Core Data Record used for?
-Electronic placing
-For direct and FAC business
-ACCORD standard
What is a quotation?
Terms and conditions offered by insurers.
Note followers don’t have to agree with Lead.
Are quotes valid indefinitely?
No. If insurer had not heard from client or broker.
Risk is reconsidered and new quote issued
Can the client accept a quote after a lot of time passes?
Yes. But up to insurer as they are not obliged.
What part of contract law applies to quotations?
Reasonable Time.
If a time not specified for quotation to be accepted.
Is an insurer on risk if client received quote but doesn’t accept?
No. The client has to accept.
Can the insurer back out if client accepts quote within given time period?
No. It cannot be withdrawn.
Unless, material information comes to light that should have been disclosed.
If client agrees a quote but wants to make changes, can the insurer adjust it?
No. Quote must be accepted as issued.
Down to insurer discretion but not legally obliged.
What happens at renewal?
Client decides if want to renew policy or change.
Only lasts 12 months.
Does a broker have to approach original insurers at renewal?
No. They do as a matter of courtesy.
Can insurers reject renewal if client late to renew?
No. Clients are given ‘Days of Grace’/period of extra time.
Can insurers write a risk after it incepts?
Yes
How do insurers prevent liability for losses that happen before they are on risk?
Contract includes WKNRL clause.
What did FCA regulations change regarding renewals in 2017?
Intermediaries and insurers must do the following:
-Disclose previous YOA premium
-Provide consumer friendly text
-Approach clients who renewed x4 and encourage to shop around.
What is the Duty of Fair Presentation?
Term under Insurance Act 2015
Insured must give all material facts of risk to prudent insurer of risk.
Known or ought to know! After reasonable search
What is the Principle of Good Faith?
To act honestly and fairly and not mislead the other party.
Applies to insured and insurer.
What happens if duty of fair presentation or good faith not complied with?
- Contract cancelled and premium retained by insurer.
- Claims not paid by insurer.
- Insured has no insurance cover.
What is the purpose of the MRC?
Summarise risk to insurers.
Produced by broker for client.
Main doc in London market for open market business.
What is the key difference for open market MRC compared to line slips and binders?
Open market MRC list risk details but lineslip and binder list DA.
What are the key components of an MRC?
- Risk Details (type, SI, pp,prem)
- Information (surveys/reports)
- Security Details (lines, order)
- Subscription Agreement (GUA leaders/details, CAP).
- Fiscal and Regulatory (tax, insured origins, reg risk location).
- Broker Remuneration (fees)
In the Open Market MRC, what are subjectives?
Under Risk Details, subjectives are things like surveys.
Required by insurers to be completed before they come on risk.
In the Open Market what is meant by Regulatory Risk Location?
Under Fiscal and Regulatory, the above is where regulators have interests in the risk.
Interests can be the following:
-Insured home country
-Physical location of risk
-Mobile asset (vessel) registered
In the Open Market MRC what is allocation of premium to coding?
Under Fiscal and Regulatory.
In Lloyd’s all risks are allocated by code and according to type of business and premium.
In the Open Market MRC when is allocation of premium to YOA applied?
Under Fiscal and Regulatory.
Policy period extends beyond 18 months.
E.g. construction, oil rigs
Is the MRC compulsory in the London Market?
No. Highly recommended.
BUT for Lloyd’s yes.
