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LM2 > Chapter 2 - Risks written in London Market > Flashcards

Chapter 2 - Risks written in London Market Flashcards

1
Q

What does agri, crop and forestry insurance cover?
What is the main peril?
Give an example of claim

A

Physical damage for any commercial crops
Hail & disease
Crop failure

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2
Q

What does bloodstock and livestock insurance cover?
What is the difference

A

Bloodstock = injury or death to horses & dogs
Livestock = injury or death to Farm animals

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3
Q

What are the different types of contingency insurance? What do they cover? And what should an UW consider (3)

A

Event cancellation - refunding tickets and rearranging event. Consider tour schedule, T&Cs for tickets, artist health

Over-redemption - Protects against a promotion incurring a net loss

Prize indemnity - covers cost against a prize that may cost the client money e.g. winning a car

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4
Q

What does personal accident / illness cover?

How is it paid?

What exclusions are there

A

Accidental injury

Predetermined amount, paid in schedules

Pre existing conditions are excluded

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5
Q

What does Kidnap & Ransom cover?
What are the main considerations

A

Ransom payment, medical fees and salary lost because of kidnap. Hostage negotiators

Consider security, confidentiality of insurance, who is the insured

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6
Q

How much market stake does property hold in Lloyds?

A

25%

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7
Q

What does Constructors All Risks insurance cover?

A

Liability and Physical damage
- Damage to building works
- Business interruption
- Public & Employer Liability

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8
Q

What period should the CAR policy period match?

A

Constructor’s contracting period

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9
Q

What is the maintenance period in CAR?

A

Additional coverage once construction has finished - only purchased if constructor has additional liability

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10
Q

What are some of the extensions in CAR?

A

Reconstruction plans
Machinery breakdown
Expenses - where additional costs incurred for overtime

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11
Q

What are 3 exclusions in CAR?

A

Defective design
Wear and tear
Existing problems

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12
Q

What is Erection All Risk

A

Coverage for cranes, or scaffolds. Can be purchased separately

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13
Q

What are the 3 constituent parts of property insurance

A

Buildings, Machinery, Stock

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14
Q

What is typically covered in an All risk property? And exclusions

A

Fire (non chemical)
Lightening
Earthquake
Explosions
Aircraft
Riots
Flood / Storm
Malicious Acts
Impact (3rd party vehicles)

Does not cover:
War
Nuclear
Inherent vice (risks which will always occur e.g. rust)
Trade risks

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15
Q

What can be additionally purchased as part of property all risk

A

Sprinkler leakage
Subsidence (Ground caving in)
Fraud
Theft
Goods in transit

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16
Q

Which class of business uses reinstatement for indemnifying the insured? What is reinstatement

A

Property.

Insurer takes over property, restores to pre loss condition

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17
Q

When does the reinstatement memorandum applied? What is it?

A

When underinsurance is applied - if sum insured is only 85% of reinstatement value at date of loss

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18
Q

What is day 1 reinstatement

A

Value of reinstatement is declared on date policy inception. Percentage value uplift is agreed to compensate for inflation

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19
Q

Whatis Onshore energy. Name 3 considerations for this coverage

A

Property risk where subject matter insured is related to energy.
Location, Activity, Risks created

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20
Q

What does Stock insurance cover and how is the premium paid?
What are the considerations

A

Physical damage (fire, water, theft) of raw and completed products
Premium instalments paid based on exposure from regular stock reports
Stockpiling

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21
Q

What does theft insurance cover and exclusions

A

Theft.
Collusion, inside job,

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22
Q

Money & Pecuniary insurance coverage, exclusions and considerations.
How are claims paid?

A

Pecuniary - Financial losses
Money - Purely cash related
Physical damage in loss. E.g. cheques.

Basic cover is on an all risk basis

Consider negotiability - how easily the item can be converted / transferred

Claims - how easily can the stolen documents be reconstructed. Pays for cancellation and reprinting costs

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23
Q

Fidelity Guarantee - Coverage, Purchasing options. Considerations

A

Covers theft / fraud from employees, recoverable up to 24 months after policy expiration

Purchased for named employees, blanket cover. role cover

Consider internal controls e.g. screening

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24
Q

BI Insurance coverage. (Contingent BI)

A

Replacing potential income as a result of a physical loss (indirectly - Contingent)

Deductible is expressed in days after incident (14 days

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25
Q

Homeowners - Coverage, UW

A

Delegated
Same risks covered as standard commercial property. Not UW in London market

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26
Q

Directors & Officers Liability coverage, exclusions, extensions. What type of policy?

A

Protection (damages & legal costs) from claims made by shareholders who have suffered financial loss. Categorised as US & Non US - losses occurring

Excludes fraud

Can extend to additional companies, extended reporting period, representation costs

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27
Q

What is a losses occurring policy?

A

Covers all claims if the occurrence date is within the policy period - usually property

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28
Q

What is a risks attaching policy?

A

Covers all claims if arising for the year that the risk is covered - can be much later

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29
Q

E&O, Professional indemnity coverage, exclusions, type of policy

A

Compulsory for brokers, solicitors. Protects damage and legal costs. Excludes claims against investment advice / recklessness

Claims made policy

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30
Q

What is the usual time limit for claims made

A

6 years

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30
Q

What is a claims made policy

A

Triggered by date of claim made against the insured. Usually liability

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30
Q

What types of professional indemnity does not have a time limit for claims made

A

Medical malpractice

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31
Q

What is public liability coverage

A

Claims made due to damage caused by employees, covers legal costs and damages

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32
Q

What is contributory negligence

A

The injured party’s share of the blame

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33
Q

Product liability coverage and exclusions

A

Losses from defective products on whole supply chain. Indemnifies damages or injury caused by product

Excludes already damaged products / liabilities and anything already covered by EL policies

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34
Q

Employer’s liability coverage, type of policy

A

Liability for injured employees - compulsory

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35
Q

What is ELTO

A

Employee Liability Tracing Office, allows insured to find insurers against previous employers

36
Q

What type of policy is Worker’s compensation, coverage

A

Strictly liability - no proof required of negligence
Paid as percentage of salary, covers medical costs
Longshoremen have special coverage

37
Q

General liability

A

Combined liability insurance

38
Q

Financial Guarantee insurance, coverage, permissions, considerations

A

Paid out if a specified event occurs
Premium paid < 2% of syndicate capacity
If risk is written outside of business plan, requires Lloyds agreement

39
Q

Product tamper - main targets, coverage,

A

Retailers
Covers financial damage for brand reputation, removal of products, alternative products, client confidence

40
Q

When is accidental contamination policies triggered?

A

When a person becoemes ill

41
Q

Product recall - coverage, exclusions

A

Recall notice, generally any additional financial costs associated with recalling the product

Excludes liability associated claims due to product, loss of income and negligence

42
Q

War insurance specifics

A

Generally not allowed. Permission obtained through lloyds on an individual risk basis (biz planning)

43
Q

Political violence / terrorism specifics

A

Usually a government backed scheme
Covers terrorism, sabotage, mutiny.

Subject matter insured similar to policies but risks is humans not natural catastrophes

44
Q

Cyber (first and third party coverage)

A

First party = own assets
third party = others losses and legal costs associated

45
Q

Warranty / M&A benefits and considerations

A

Protects first party if counter party breaches warranties

No need to reserve in case of claims

Consider the risk allocation, complexity of deal

46
Q

Aviation Damage Coverage, Exclusions, Claim process

A

Accidental damage whilst in flight, ground or taxiing - single incident

Exclude damage due to wear and tear

Repair and replacement, requires loss assessor. If plane is lost then found, this becomes insurer’s property if claim is already paid

47
Q

Drone / UAV insuance coverage, requirements

A

Covers physical (cyber, theft, damage), and liability
Requires license to fly drones
Minimum liability is 777k

48
Q

Aviation Liability Third Party coverage, exclusions

A

Damages to third parties, excludes employees, crew, passengers, property, pollution as this is either part of another policy or is not insurable

49
Q

Aviation Liability - Passenger, coverage and exclusions

A

Accidental bodily injury, losses to cargo (due to damage to aircraft)
Excludes employees and crew
Requires listed individuals with minimum experience and geographical limits

50
Q

Aviation Liabilty - Operator (3 categories), coverage and exclusions

A

Premises - Public liability, injury or property damage caused by employees. Excludes product related liability

Hangar keeper - Losses for third party aircraft whilst on ground

Products - injury or property damage caused by products issued by employees

51
Q

What is wholesale grounding

A

Product recall insurance, protecting airlines for mass grounding of aircraft (think 737 Max)

52
Q

How does an shipbuilder ensure there is no underinsurance?

A

Ensure all values at risk are updated regularly

53
Q

What are the 4 areas of coverage for Vessel construction all risk?

A

Physical damage / Loss
Collision and marine liability (P&I)
War
Strikes / Terrorism

54
Q

How are perils handled in Vessel Physical damage?

Provide examples and what are additional coverage subject to the due diligence of insured?

What cannot be bought back as additional coverage?

A

Perils must be specifically named, includes Piracy, explosion and breakdown.

Additional coverage can be listed for consequential damage, accidents and negligence.

Radioactive contamination is always excluded

55
Q

What is an legal obligation of the shipowner

A

Obligation to provide compensation for physical damage to vessel

56
Q

What does collision liability cover?
How much does the standard hull policy cover?

A

Pay for damage to another vessel if the insured collides with it.

Standard policies cover 75%. 25% requires specialist liability cover

57
Q

What is general average?

A

If a shipowner takes a hit to their ship for saving someone else - everyone chips in

58
Q

What is salvage in marine insurance

A

The hull insurer rewarding the saviour ship a reward

59
Q

What is sue and labour? Why are insurers interested in this

A

Insurers paying additional cost in addition to total loss

To incentivise ship owners to minimise losses

60
Q

What are the 3 types of cargo coverage?

A

All Risk
Combinations of named perils

61
Q

Which clause of cargo coverage has the least amount of cover?

A

C

62
Q

How does cargo and hull insurers differ in terms of coverage?

A

Cargo insurers do not provide liability cover

63
Q

What is the coverage and exclusions to offshore energy exploration insurance

A

Physical damage all risk. Excludes delay, wear and tear

64
Q

What are the 3 main risks in exploration offshore energy

A

Oil / Gas blowout
Redrilling
Seepage and pollution

65
Q

What is the technical term for the different parties in a contract?

A

Joint / co venturers

66
Q

How does attachment of claims work in offshore exploration energy insurance?

A

New well = attach to current policy
Working well = attach to next policy year

67
Q

What is the coverage of control of well in offshore energy exploration?

A

Covers only cost of getting the oil spill under control

68
Q

What is the coverage of redrilling in offshore energy exploration ?

A

Covers only the cost associated with redrilling

69
Q

What is the coverage of seepage and contamination in offshore exploration energy

A

Cost of remediating bodily injury, damage to property and clean up costs

70
Q

What are additional coverage points of offshore exploration energy

A

Making the well safe
Underground control of well
Wreckage removal
Loss of equipment that has been rented

71
Q

What are the key considerations for construction all risk insurance on offshore energy

A

Rig building participants
Delivery to site
Assembly

72
Q

What are the 2 key elements for CAR on offshore energy

A

Physical damage to the rig
Liability
Excludes all coverage covered in exploration insurance

73
Q

Who generally issues shipowners liability insurance?

A

Mutuals - consisting of P&I Clubs

74
Q

What are the risks covered by marine liability insurers

A

Cargo
Crew
Collision (25% not covered by hull and anything that is not a ship)
Third parties
Sudden pollution
Wrecks
Fines (non criminal)

75
Q

Who would marine employer liability insurance cover

A

Seamen, not categorised as ship crew

76
Q

Who would marine professional negligence cover?

A

Ship managers, architects, surveyors and brokers

77
Q

Who and what does port liability insurance cover?

A

Similar to public and employer liability insurance coverage for ports

78
Q

What is loss of hire / earnings insurance?

A

Business interruption for ships, excess is period of days

79
Q

What does specie and jewellers block insurance cover and exclusions

A

physical damage and liability risks to gemstones, documents etc

Excludes missing only when stocktaking

80
Q

What is the kimberly process

A

Prevents blood diamonds being introduced to the trade

81
Q

What does fine art insurance cover? And exclusions

A

Damage and depreciation (as a result of damage)

Does not cover climate, vermin or consequential damage

82
Q

Cash in transit insurance coverage and exclusions

A

Money being moved between banks, does not cover collusion

83
Q

Political risks coverage (4) - precautions

A

Covers seizing of assets by foreign, undemocratic goverments. Includes:
Investment risk
Fixed asset risk
mobile asset risk
trade related risks

Insurance company must not violate EU/ US embargoes

84
Q

What is the difference between contract frustration / trade credit and its coverage

A

Losses arising from one sided cancellation of contracts / not being paid for goods

Trade credit = commercial
Contract frustration = governmental

85
Q

Bond risks insurance coverage

A

Losses arising from companies defaulting on bonds

86
Q

How is motor insurance split geographically for Lloyds, how does it get written and what does it cover?

A

US, EU, rest of world
Covers physical damage and liability
Delegated underwriting authority because of local knowledge

87
Q

How does Lloyds incorporate ESG into their investment strategy

A

Managing agents must use non financial risk factors such as climate risk in investment decisions

88
Q

How does managing agents spread risk on investment strategies?

A

Spread risk across different classes of business and geographically

LM2 (10 decks)

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