Chapter 2

Question 1

What is the role of members’ agent at Lloyds?

Answer 1

Advising their client on the advantages and disadvantages of investing in Lloyds

Question 2

IPT is 20% for which insurance?

Answer 2

Travel Insurance

Question 3

What is the function of a managing general agent?

Answer 3

Providing their specialist expertise they have to offer in their niche area

Question 4

A protective cell company is required to have an approved business plan for…

Answer 4

Each cell

Question 5

Companies that manage one or more Lloyds syndicates on behalf of members are known as…

Answer 5

Managing agents

Question 6

The Motor Insurers Bureau is financed by…

Answer 6

A levy on authorised UK motor insurers

Question 7

Under contract certainty when must the signing down of lines be done?

Answer 7

Prior to inception

Question 8

What insurance do Protection and Indemnity associations, associate with?

Answer 8

Marine liability

Question 9

What is the main structure of the insurance market?

Answer 9

• Buyers
• Intermediaries
• Aggregators
• Insurers
• Reinsurers

Question 10

Types of buyers

Answer 10

• Private Individuals
• Partnerships
• Companies
• Public bodies
• Associations/clubs

Question 11

Private individuals

Answer 11

Typically buy insurance policies for things like cars, mobile and household.

Question 12

Partnerships

Answer 12

Most commonly found in the medical and legal professions. Their insurance tends to be catered for by specialist schemes

Question 13

Companies

Answer 13

Typically need insurance for staff and property and is bought to protect the business.

Question 14

Public bodies

Answer 14

Major buyers of insurance and include local authorities and schools. Typically owned by the government.

For example: NHS, polices and schools

Question 15

Associations/clubs

Answer 15

This could be a football club or stamp collectors club they need insurance. Typically property and liability

Question 16

Types of insurers

Answer 16

• Propriety companies
• Mutual companies
• Captive insurers
• Societas Europeas
• Lloyds
• Takaful insurers
• Mutual indemnity associations

Question 17

Propriety companies

Answer 17

Owned by their shareholder and registered under The Companies Act 1985. All of their profits are kept.

Question 18

Mutual companies

Answer 18

Owned by their policyholders and their profits are shared between the policy holders by way of lower premiums.

Question 19

Captive insurers

Answer 19

Not open to everyone, their insurance is established by their parent companies/groups. Captive insurance is a tax efficient way of risk transfer

Question 20

Societas Europeas

Answer 20

Owned by its parent company. A cost efficient way to merge companies across the EU.

Question 21

Lloyds

Answer 21

Where sizeable/complex industrial risks all over the world are placed.

Question 22

Takaful insurers

Answer 22

Type of insurance that has its roots in the Islamic financial services industry and bases the ruling of Sharia Law on financial transactions.

Question 23

Mutual indemnity associations

Answer 23

Owned by their policyholders. Mainly operate in marine insurance

Question 24

Lloyds syndicate

Answer 24

Made up of one or more members that join together to accept insurance risks, which they will either cover all or a portion of

Question 25

What do syndicates do?

Answer 25

They write a range of polices, direct insurance and reinsurance.

Covering: casualties, property, marine, energy, motor and other risks

Question 26

Who do syndicates employ?

Answer 26

Syndicates employ a managing agent who then appoint an underwriter to accept risks

Question 27

Managing agent

Answer 27

A managing agent is a company set up to manage one or more syndicates, on behalf of members who provide the capital.

Question 28

Who do managing agents employ?

Answer 28

They employ underwriters.

Question 29

Who can be an underwriter?

Answer 29

• Person employed by an insurance company to make decisions
• Lloyds underwriters
• Insurance company itself

Question 30

What is an underwriters main function?

Answer 30

• Assess the risks that people bring to the pool
• Decide whether or not to accept the risk
• Determine the terms/conditions

Question 31

Claims personnel

Answer 31

• Deals with claims quickly and fairly
• Distinguish real and fraudulent claims
• Determine a realistic cost of a claim
• Settle claims with the minimum of wastage

Question 32

Loss adjusters

Answer 32

An expert in claims processing, they act on the insurers behalf.

• Investigate circumstances of a claim
• Negotiate amounts claimed
• Determine whether the loss is covered

Question 33

Loss assessors

Answer 33

An expert in dealing with claims and acts on behalf of the insured/policyholder

• Appointed by the policy holder to prepare and negotiate a claim on their behalf

Question 34

Surveyors

Answer 34

Carry out a variety of functions on behalf of the insures

Question 35

Actuaries

Answer 35

A professionally qualified person who applies probability and statistics theory to problems of insurance, investment, financial and risk management

Question 36

Risk managers

Answer 36

Appointed by firms for taking control of and developing a formal strategy

• Provide guidance on best practice in these areas to management
• The transfer of appropriately identified risk by contract of insurance