Chapter 1 Flashcards
Within the UK, what three broad types can all insurance companies be put in?
A composite company
A life company
A general insurance company
What is a composite company
They transact both long term business (life) and general business such a motor, household
What is a life company?
Only able to transact long term business
What is a general insurance company
Only able to transact general business
According to the ABI the UK insurance industry is what?
The largest in Europe and fourth largest in the world
Accounted for 21.2% of the total EU premium income
Like any other market, insurance market comprises of what
Sellers : insurance companies and Lloyds
Buyers: general public, industry and commerce and public authorities
Middleman: insurance brokers and intermediaries
What do you insure
The financial interest in that asset which is at risk
What is an intermediary
An agent who is appointed by a party to seek the best cover and price and recommend an insurance company and or insurance policy
A - What is a proprietary company
Company owned by shareholders, most insurers
Do proprietors companies have an authorised and issued share capital
Yes and the shareholders get the profit after expenses and reserves
What is the shareholders liability Limited to
To the nominal value of the shares hence the term limited liability
What types of insurance companies are under propriety companies
A composite company And a general insurance company
What is meant by the term risk transfer
Well they charge relatively small premiums in comparison to the exposed risk to large numbers of the same type of customers
 Why would insurance purchase reinsurance
To limit annual fluctuations in the losses that affect their underwriting account
To be protected in the case of a catastrophe
A - What is a mutual company
They are Policyholder owned and a surplus is reinvested in a company or to reduce the premiums
How are mutual companies formed
Buy deed of settlement or registration under the companies act
What is sector do mutual companies operate in
In the long-term sector alongside proprietary companies offering their customers at the full benefits of saving over a long period of time between 10 to 25 years
What is the demutualisation
Where mutual companies become proprietary companies
Who owns companies limited by guarantee and without the word mutual in the title
Policyholders
What business will mutual companies transact
Life or general insurance business
What are these examples of
Life and annuity
Permanent health
Critical illness
Long-term business
What are these and example of
Accident and health
Motor
Liability
Insurance and reinsurance classes
A - In Lloyds what does a franchisor do
Approving business plans and making sure members are compliant
Do you Lloyds transact insurance
No as this is a business of the underwriting member of Lloyds to make up the Lloyds market