Chap 8-10 Flashcards
Under the Insurance Act 2015, what are the reasons for unexpected termination of a contract?
- breach of duty of fair presentation
- breach of warranty
- fraud
What is a service company?
Managing agents set up insurance orgs in various locations (UK/abroad)
These orgs underwrite business on behalf of syndicate and have syndicate/MA brand behind them
What is writing risks on a services basis?
In EU, insurers can stay in home country and write risks coming out of other countries on a ‘cross-border’ basis.
Regulated only by home regulator
What is writing risks on an establishment basis?
Insurers can choose to set up an office in another country and write risks from there
Contract certainty is intended to ensure that all parties are certain of all the terms at what point?
The point the contract comes into force
In the London Market, at what point is the contract between insured and insurer normally deemed to be concluded?
When the UWR puts their line down on an MRC
Under the GUA, a slip leader can be from…
Any part of the London Market
What does ‘days of grace’ mean on a renewal policy?
An insurance policy can be renewed on the original terms after the original policy has expired, even if the premium has not been paid
What type of business does NOT have a standard version of the MRC?
Company Market buiness
When is an insurer operating in the London Market NOT likely to use a standard London Market policy wording?
When another market is writing the primary layer
What is a coverholder?
A parter for delegated UWR agreement under a binding authority
- must obtain approval from Lloyd’s to work w/ a Lloyd’s syndicate
- sponsoring broker/MA
- Update ATLAS platform once a year w/ info (for Lloyd’s)
How are claims handled on a consortium basis?
The leader is responsible for handling all claims
A binding authority is written on a subscription basis. Who is generally responsible for organising an audit of the arrangement?
The leader
What registration, if any, does Lloyd’s require of binding authority agreements?
All but restricted authority agreements must be registered
A coverholder has binding authority where it is not able to make decisions and all decisions need to be referred to the underwriters. What is this type of authority known as?
A prior submit binding authority
How long does it take for a coverholder to be approved by Lloyd’s?
Within 25 working days
In the IUA Company Market, how many insurers make claims agreements in the non-marine market?
All individual insurers on a risk
In the IUA Company Market, how many insurers make claims agreements in the Marine market?
If Lloyd’s involvement, one company can bind for rest of market
If no Lloyd’s involvement, first two companies required to agree
In the IUA Company Market, how many insurers make claims agreements in the Aviation market?
If direct business, first two companies agree
If fac reinsurance, lead company only
In the IUA Company Market, how many insurers make claims agreements in the Marine/Aviation market, if it is an Excess of Loss reinsurance?
First 2 insurers must always agree
A claim is eligible for handling under the Single Claims Agreement Party if it is…
Under £250k and neither complex nor controversial
A claim is considered complex (2 leaders) if the amount claimed on a single risk is…
- > £1M for 3rd party business
- > £2M for 1st party
- > £5M for Excess of Loss Reinsurance
A claim is considered complex (2 leaders) if (non-financial)…
- it is in excess of policy limits
- allegation against insurers of non-cmpliance with regulatory requirements
- potential dispute proceedings
What is organisational conflict in terms of claims handling
The whole insurer decides it cannot be an agreement party on a claim, but it will still pay
What is the Enterprise Act 2016, in relation to claims?
Insured can take action for **damages for late payment **of a claim any time up to 12 months after the claim was paid
What is the max monetary amount the Financial Ombudsman Service can award?
- £415k for complaints received after 1st April 2023
- £190k for complainst received before 1st April 2023
How is the Financial Ombudsman Service funded?
- a levy paid by all firms
- case fee payable by the firm to which the complaint relates
Under the Financial Services Comp. Scheme (FSCS), protection is 100% for…
- compulsory insurance
- professional indemnity
- long-term insurance (pensions/life)
- claims for injury, sickness, infirmity
Otherwise, protection is 90%
Within the Lloyd’s Market, what are the documents called that set out the rules concering the agreement parties required for claims?
Lloyd’s Claims Lead Arrangements
What are the advantages of a Captive Insurer?
- tax efficiency
- not passing funds to insurer
- not exposed to market risks
What are the disadvantages of a Captive Insurer?
- funding staff
- ensure appropriate premium for risk
- no access to insurer knowledge
- no external funds for losses
What is a Mutual Company?
- Owned by POLICYHOLDERS
- they share in the profits by way of lower premiums
- ‘Limited by guarantee’ = max liabs is limited to their premium
What is a Proprietary Insurance company?
- Owned by SHAREHOLDERS
- Contribute to share of firm, therefore profits belong to them
- LIMITED LIABILITY = shareholder’s liabs limited to value of their shares
