Chapter 1 Flashcards
Why would an insurer not take 100% risk - 8 Total
Capacity
Branch office controls
Aggregating of Risk
Broker
Licensing
Client Influence
Reinsurance availability
Geographical Restrictions
Why would insurance be placed outside of London (3)
Insured location
Local insurance knowledge
Claims
What are the 3 types of insurance companies and what are their benefits and disadvantages
Proprietary - owned by shareholders, are LLCs
Mutual - Owned by policyholders, premiums are lowered due to profits. Limit by Guarantee (Limit insured proportional to premium paid)
Captives - Owned by a parent, tax efficient, unexposed to general market premium rises. Requires funding for extra staff and no external funds to cover large losses
What is a mutual indemnity and in which COB would you see this?
Members group together to self insure, run by professional managers. Only in Marine
What is a Lloyds service company?
Delegated underwriting from their syndicate
What are the considerations to become a Lloyds syndicate and separate insurer? (4)
Brand - Lloyds is famous
Permission - Centralised
Capacity - Can spread risk in syndicate and company
Regulation - Lloyds require more rules
What is an MGA
Managing General Agent
Holds delegated underwriting authority but does not take on risks, acts as an agent of insurer
How many and what are the 3 types of Lloyds members
15 (3 working, 3 external, 9 nominated)
Working - Provide capital, active member
External - provider of capital but not yet a working member
Nominated - Non exec directors
Who is in the society of lloyds and what do they do?
Members, provide capital
What % of Lloyds risks is UK based and what is it for IUA
12 - Lloyds
55 - IUA
What is the term used to describe a permission to operate in a country?
License
How does the US grant licensing?
What types of business are Lloyds allowed to undertake in the US?
What is mandatory in all countries (2)
State by state
Surplus lines & reinsurance
Regular provision of data relating to risks and taxes
How is compliance enforced in companies? (2)
Systems & controls
Education & Training
Lloyds’ Principles of Business is held accountable by who?
Managing agent’s board
Why is the London Market attractive (8)?
Broker quality
Reputation
Brand
High Capacity
Insurance knowledge - Unusual risks
Entrepreneurial - Bespoke products
License granting
Claims service
