C1 - C Flashcards
Qualities of the London Market that attract clients
- Quality of brokers
- Reputation
- Brand
- Capacity
- Knowledge
-Flexibility/entrepreneurial spirit - Licences
- Claims service
Quality of brokers
there is an unrivalled concentration of quality and knowledge among the
London Market brokers.
They provide their clients with the highest level of advice and support that they could expect in both the placing and claims processes.
A broker in London can be a retail broker, which is where they will have direct contact with the client as well as the insurers.
they can be a wholesale broker, where their contact is with another broker (the retail broker).
Reputation
Clients purchase insurance ultimately to be able to make claims if required and the ongoing ability of the market to pay claims enhances its reputation.
Organisations with a record of great customer service, treating every customer fairly and with respect, build themselves a good reputation;
Brand
This is slightly different to reputation and concerns the visibility and identification of an insurer’s name.
The insured may select the insurer purely on this basis, without necessarily knowing anything more about
the firm.
Lloyd’s and the individual companies which make up the London Market seek to have a brand that is easily identifiable and trusted.
Capacity
an insurer agrees its capacity with the regulator and if they reach it too early in the year then they either have to stop underwriting or go back to the
regulator and ask for increased capacity.
The measurement of capacity is generally in premium income
However, it is possible for
capacity to be measured in geographical terms (eg. an insurer not wanting to write more than a certain number of risks in a particular town).
London is a subscription market which means that risks can be shared among several insurers. In addition, there is a large total capacity within
the market as a whole, which means that larger risks can be accepted
within the marketplace.
Overseas or regional insurers/insurance markets may not be able to
offer the same amount of capacity
Knowledge
New types of risk regularly come into the market and underwriters must be able to identify the key elements of the risk, in order to work out how to cover it.
The London Market has many years of accumulated knowledge and can use that historic knowledge, applying it to consider new risks, regions or requirements for cover.
A successful market or insurer must anticipate the client’s developing needs to have a product available when they need it.
An insurance market that develops a product after its
competitors will have to fight for market share rather than being ‘ahead of the game’ by developing it early.
The London Market is very focused on research and development to ensure that its insurers remain at the
forefront of knowledge about emerging risks.
Flexibility/entrepreneurial spirit
LM is highly flexible in the types of insurance and
reinsurance that it can offer its clients
Competition on the basis of
price alone is not a viable approach in today’s insurance market. London Market insurers prefer to compete on product
If they can be flexible by amending or even rewriting standard policy wordings to better suit the individual client, while maintaining control of
the product this has more value to both parties.
Artificial intelligence within insurance is of increasing interest to insurers.
AI has a number of different functions for example:
* Automating tasks that are repetitive such as classification of first notice of loss in the claims process.
* Analysing large quantities of data to provide insight and support human decision making.
* Assist with the use of parametric products (types of insurance that are triggered by a certain weather event happening for example
Licences
London Market insurers have licences in many parts of the world in order to write risks there.
Some clients have operations which are worldwide in nature and hence they are drawn to a marketplace where they can possibly obtain one policy to cover the entire worldwide risk for a particular peril. This may be preferable to obtaining a number of individual policies on a per location basis which can be more of an administrative burden and
potentially more expensive.
Claims service
London Market has a good reputation for professional claims handling
the money movement process for claims is still sometimes
subject to criticism as the elapsed time in the claims cycle is generally longer than in competitor markets such as Bermuda.
Subdividing classes of business
First party classes are those that cover physical loss or damage to the insured
property
third party classes cover liability to others because of injury to them or loss or damage to their property.
the classes can be divided into short tail and long tail.
The length of the tail refers to the time lag between the policy being in force and the final conclusion of claims
that might be made. As such, first party classes are typically short tail, and third party
classes are typically long tail
