Business Conducted In The London Market

Question 1

Name the key documents presented to insurers

Answer 1

-Proposal forms

-Presentations

-Market Reform Contract

-Core Data Record and iMrc

-Endorsement

Question 2

What are legal issues for insurers using proposal forms?

Answer 2

Forms ask specific questions and details.

If missing question, insurer would struggle to argue non-disclosure in court.

Question 3

Why is the Market Reform Contract the most popular?

Answer 3

-Standardised document

-Complies with contract certainty

-Electronic submission

Question 4

What is Core Data Record used for?

Answer 4

-Electronic placing

-For direct and FAC business

-ACCORD standard

Question 5

What is a quotation?

Answer 5

Terms and conditions offered by insurers.

Note followers don’t have to agree with Lead.

Question 6

Are quotes valid indefinitely?

Answer 6

No. If insurer had not heard from client or broker.

Risk is reconsidered and new quote issued

Question 7

Can the client accept a quote after a lot of time passes?

Answer 7

Yes. But up to insurer as they are not obliged.

Question 8

What part of contract law applies to quotations?

Answer 8

Reasonable Time.

If a time not specified for quotation to be accepted.

Question 9

Is an insurer on risk if client received quote but doesn’t accept?

Answer 9

No. The client has to accept.

Question 10

Can the insurer back out if client accepts quote within given time period?

Answer 10

No. It cannot be withdrawn.

Unless, material information comes to light that should have been disclosed.

Question 11

If client agrees a quote but wants to make changes, can the insurer adjust it?

Answer 11

No. Quote must be accepted as issued.

Down to insurer discretion but not legally obliged.

Question 12

What happens at renewal?

Answer 12

Client decides if want to renew policy or change.

Only lasts 12 months.

Question 13

Does a broker have to approach original insurers at renewal?

Answer 13

No. They do as a matter of courtesy.

Question 14

Can insurers reject renewal if client late to renew?

Answer 14

No. Clients are given ‘Days of Grace’/period of extra time.

Question 15

Can insurers write a risk after it incepts?

Answer 15

Yes

Question 16

How do insurers prevent liability for losses that happen before they are on risk?

Answer 16

Contract includes WKNRL clause.

Question 17

What did FCA regulations change regarding renewals in 2017?

Answer 17

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.

Question 18

What is the Duty of Fair Presentation?

Answer 18

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

Question 19

What is the Principle of Good Faith?

Answer 19

To act honestly and fairly and not mislead the other party.

Applies to insured and insurer.

Question 20

What happens if duty of fair presentation or good faith not complied with?

Answer 20

1. Contract cancelled and premium retained by insurer.
2. Claims not paid by insurer.
3. Insured has no insurance cover.

Question 21

What is the purpose of the MRC?

Answer 21

Summarise risk to insurers.

Produced by broker for client.

Main doc in London market for open market business.

Question 22

What is the key difference for open market MRC compared to line slips and binders?

Answer 22

Open market MRC list risk details but lineslip and binder list DA.

Question 23

What are the key components of an MRC?

Answer 23

1. Risk Details (type, SI, pp,prem)
2. Information (surveys/reports)
3. Security Details (lines, order)
4. Subscription Agreement (GUA leaders/details, CAP).
5. Fiscal and Regulatory (tax, insured origins, reg risk location).
6. Broker Remuneration (fees)

Question 24

In the Open Market MRC, what are subjectives?

Answer 24

Under Risk Details, subjectives are things like surveys.

Required by insurers to be completed before they come on risk.

Question 25

In the Open Market what is meant by Regulatory Risk Location?

Answer 25

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

Question 26

In the Open Market MRC what is allocation of premium to coding?

Answer 26

Under Fiscal and Regulatory.

In Lloyd’s all risks are allocated by code and according to type of business and premium.

Question 27

In the Open Market MRC when is allocation of premium to YOA applied?

Answer 27

Under Fiscal and Regulatory.

Policy period extends beyond 18 months.

E.g. construction, oil rigs

Question 28

Is the MRC compulsory in the London Market?

Answer 28

No. Highly recommended.

BUT for Lloyd’s yes.