Chapter 1 - The Framework of Business Flashcards
What is a domestic market?
Serves customers within its own territory
What is a global market?
Sources business from within it’s own territory and from beyond it’s borders
How does licensing and regulation differ between Lloyd’s and company market?
Companies must obtain their own permissions, Lloyd’s does it centrally
What are the two main risks to investors in the London Market?
- claims > premiums
- investments of premiums fail to perform
How are risks to underwriters managed?
- regulation of investment strategy
- underwriting and pricing discipline
What are the main chanllenges to the London Market?
- capacity and expertise overseas increasing
- London expense ratios higher than counterparts
- regulatory burden high for LM which increases insurer’s operational cost
What are the main areas of focus for the future of Lloyd’s?
- placement
- claims
- delegated authority
Who are brokers regulated by?
FCA only
Who are Lloyd’s and managing agents regulated by?
FCA and PRA, Lloyd’s own market regulation also
What are the key objectives of most insurance regulation?
- insurers have financial capacity to pay claims
- insurers treat policyholders fairly
- policyholders have access to an efficient insurance market
What are the two most important areas within the FCA handbook for underwriting?
- principles of business
- insurance conduct of business
What does the principles of business say about how companies should act?
- integrity
- skill care and diligence
- risk management
- adequate financial resrouces
- market conduct
- fair treatment of customers
- information shared clearly
- manage conflicts
- suitable advice
- protection of client assets
- openness with regulator
What rules does icobs talk about?
- distance marketing of products
- inform clients about purchasing decisions
- advise clients about right to cancel
- handle claims
What are the most important standards in the PRA rulebook?
- allocation of responsibilities
- conduct standards
- fitness and propietary
- senior insurance management functions
- Lloyd’s special provisions
Describe the senior managers regime
- senior managers performing senior management functions need FCA and PRA approval before taking role
- each senior manager needs statement of responsibilities
- compliance and regulatory requirements etc prescribed reponsibilities
- duty to prevent misconduct
