Chapter 2 - Risks written in London Market Flashcards
What does agri, crop and forestry insurance cover?
What is the main peril?
Give an example of claim
Physical damage for any commercial crops
Hail & disease
Crop failure
What does bloodstock and livestock insurance cover?
What is the difference
Bloodstock = injury or death to horses & dogs
Livestock = injury or death to Farm animals
What are the different types of contingency insurance? What do they cover? And what should an UW consider (3)
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
What does personal accident / illness cover?
How is it paid?
What exclusions are there
Accidental injury
Predetermined amount, paid in schedules
Pre existing conditions are excluded
What does Kidnap & Ransom cover?
What are the main considerations
Ransom payment, medical fees and salary lost because of kidnap. Hostage negotiators
Consider security, confidentiality of insurance, who is the insured
How much market stake does property hold in Lloyds?
25%
What does Constructors All Risks insurance cover?
Liability and Physical damage
- Damage to building works
- Business interruption
- Public & Employer Liability
What period should the CAR policy period match?
Constructor’s contracting period
What is the maintenance period in CAR?
Additional coverage once construction has finished - only purchased if constructor has additional liability
What are some of the extensions in CAR?
Reconstruction plans
Machinery breakdown
Expenses - where additional costs incurred for overtime
What are 3 exclusions in CAR?
Defective design
Wear and tear
Existing problems
What is Erection All Risk
Coverage for cranes, or scaffolds. Can be purchased separately
What are the 3 constituent parts of property insurance
Buildings, Machinery, Stock
What is typically covered in an All risk property? And exclusions
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
What can be additionally purchased as part of property all risk
Sprinkler leakage
Subsidence (Ground caving in)
Fraud
Theft
Goods in transit
Which class of business uses reinstatement for indemnifying the insured? What is reinstatement
Property.
Insurer takes over property, restores to pre loss condition
When does the reinstatement memorandum applied? What is it?
When underinsurance is applied - if sum insured is only 85% of reinstatement value at date of loss
What is day 1 reinstatement
Value of reinstatement is declared on date policy inception. Percentage value uplift is agreed to compensate for inflation
Whatis Onshore energy. Name 3 considerations for this coverage
Property risk where subject matter insured is related to energy.
Location, Activity, Risks created
What does Stock insurance cover and how is the premium paid?
What are the considerations
Physical damage (fire, water, theft) of raw and completed products
Premium instalments paid based on exposure from regular stock reports
Stockpiling
What does theft insurance cover and exclusions
Theft.
Collusion, inside job,
Money & Pecuniary insurance coverage, exclusions and considerations.
How are claims paid?
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
Fidelity Guarantee - Coverage, Purchasing options. Considerations
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
BI Insurance coverage. (Contingent BI)
Replacing potential income as a result of a physical loss (indirectly - Contingent)
Deductible is expressed in days after incident (14 days
Homeowners - Coverage, UW
Delegated
Same risks covered as standard commercial property. Not UW in London market
Directors & Officers Liability coverage, exclusions, extensions. What type of policy?
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
What is a losses occurring policy?
Covers all claims if the occurrence date is within the policy period - usually property
What is a risks attaching policy?
Covers all claims if arising for the year that the risk is covered - can be much later
E&O, Professional indemnity coverage, exclusions, type of policy
Compulsory for brokers, solicitors. Protects damage and legal costs. Excludes claims against investment advice / recklessness
Claims made policy
What is the usual time limit for claims made
6 years
What is a claims made policy
Triggered by date of claim made against the insured. Usually liability
What types of professional indemnity does not have a time limit for claims made
Medical malpractice
What is public liability coverage
Claims made due to damage caused by employees, covers legal costs and damages
What is contributory negligence
The injured party’s share of the blame
Product liability coverage and exclusions
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
Employer’s liability coverage, type of policy
Liability for injured employees - compulsory
What is ELTO
Employee Liability Tracing Office, allows insured to find insurers against previous employers
What type of policy is Worker’s compensation, coverage
Strictly liability - no proof required of negligence
Paid as percentage of salary, covers medical costs
Longshoremen have special coverage
General liability
Combined liability insurance
Financial Guarantee insurance, coverage, permissions, considerations
Paid out if a specified event occurs
Premium paid < 2% of syndicate capacity
If risk is written outside of business plan, requires Lloyds agreement
Product tamper - main targets, coverage,
Retailers
Covers financial damage for brand reputation, removal of products, alternative products, client confidence
When is accidental contamination policies triggered?
When a person becoemes ill
Product recall - coverage, exclusions
Recall notice, generally any additional financial costs associated with recalling the product
Excludes liability associated claims due to product, loss of income and negligence
War insurance specifics
Generally not allowed. Permission obtained through lloyds on an individual risk basis (biz planning)
Political violence / terrorism specifics
Usually a government backed scheme
Covers terrorism, sabotage, mutiny.
Subject matter insured similar to policies but risks is humans not natural catastrophes
Cyber (first and third party coverage)
First party = own assets
third party = others losses and legal costs associated
Warranty / M&A benefits and considerations
Protects first party if counter party breaches warranties
No need to reserve in case of claims
Consider the risk allocation, complexity of deal
Aviation Damage Coverage, Exclusions, Claim process
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
Drone / UAV insuance coverage, requirements
Covers physical (cyber, theft, damage), and liability
Requires license to fly drones
Minimum liability is 777k
Aviation Liability Third Party coverage, exclusions
Damages to third parties, excludes employees, crew, passengers, property, pollution as this is either part of another policy or is not insurable
Aviation Liability - Passenger, coverage and exclusions
Accidental bodily injury, losses to cargo (due to damage to aircraft)
Excludes employees and crew
Requires listed individuals with minimum experience and geographical limits
Aviation Liabilty - Operator (3 categories), coverage and exclusions
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
What is wholesale grounding
Product recall insurance, protecting airlines for mass grounding of aircraft (think 737 Max)
How does an shipbuilder ensure there is no underinsurance?
Ensure all values at risk are updated regularly
What are the 4 areas of coverage for Vessel construction all risk?
Physical damage / Loss
Collision and marine liability (P&I)
War
Strikes / Terrorism
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?
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
What is an legal obligation of the shipowner
Obligation to provide compensation for physical damage to vessel
What does collision liability cover?
How much does the standard hull policy cover?
Pay for damage to another vessel if the insured collides with it.
Standard policies cover 75%. 25% requires specialist liability cover
What is general average?
If a shipowner takes a hit to their ship for saving someone else - everyone chips in
What is salvage in marine insurance
The hull insurer rewarding the saviour ship a reward
What is sue and labour? Why are insurers interested in this
Insurers paying additional cost in addition to total loss
To incentivise ship owners to minimise losses
What are the 3 types of cargo coverage?
All Risk
Combinations of named perils
Which clause of cargo coverage has the least amount of cover?
C
How does cargo and hull insurers differ in terms of coverage?
Cargo insurers do not provide liability cover
What is the coverage and exclusions to offshore energy exploration insurance
Physical damage all risk. Excludes delay, wear and tear
What are the 3 main risks in exploration offshore energy
Oil / Gas blowout
Redrilling
Seepage and pollution
What is the technical term for the different parties in a contract?
Joint / co venturers
How does attachment of claims work in offshore exploration energy insurance?
New well = attach to current policy
Working well = attach to next policy year
What is the coverage of control of well in offshore energy exploration?
Covers only cost of getting the oil spill under control
What is the coverage of redrilling in offshore energy exploration ?
Covers only the cost associated with redrilling
What is the coverage of seepage and contamination in offshore exploration energy
Cost of remediating bodily injury, damage to property and clean up costs
What are additional coverage points of offshore exploration energy
Making the well safe
Underground control of well
Wreckage removal
Loss of equipment that has been rented
What are the key considerations for construction all risk insurance on offshore energy
Rig building participants
Delivery to site
Assembly
What are the 2 key elements for CAR on offshore energy
Physical damage to the rig
Liability
Excludes all coverage covered in exploration insurance
Who generally issues shipowners liability insurance?
Mutuals - consisting of P&I Clubs
What are the risks covered by marine liability insurers
Cargo
Crew
Collision (25% not covered by hull and anything that is not a ship)
Third parties
Sudden pollution
Wrecks
Fines (non criminal)
Who would marine employer liability insurance cover
Seamen, not categorised as ship crew
Who would marine professional negligence cover?
Ship managers, architects, surveyors and brokers
Who and what does port liability insurance cover?
Similar to public and employer liability insurance coverage for ports
What is loss of hire / earnings insurance?
Business interruption for ships, excess is period of days
What does specie and jewellers block insurance cover and exclusions
physical damage and liability risks to gemstones, documents etc
Excludes missing only when stocktaking
What is the kimberly process
Prevents blood diamonds being introduced to the trade
What does fine art insurance cover? And exclusions
Damage and depreciation (as a result of damage)
Does not cover climate, vermin or consequential damage
Cash in transit insurance coverage and exclusions
Money being moved between banks, does not cover collusion
Political risks coverage (4) - precautions
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
What is the difference between contract frustration / trade credit and its coverage
Losses arising from one sided cancellation of contracts / not being paid for goods
Trade credit = commercial
Contract frustration = governmental
Bond risks insurance coverage
Losses arising from companies defaulting on bonds
How is motor insurance split geographically for Lloyds, how does it get written and what does it cover?
US, EU, rest of world
Covers physical damage and liability
Delegated underwriting authority because of local knowledge
How does Lloyds incorporate ESG into their investment strategy
Managing agents must use non financial risk factors such as climate risk in investment decisions
How does managing agents spread risk on investment strategies?
Spread risk across different classes of business and geographically
