Chapter 2 - Risks written in the London Market Flashcards
What is the main peril in agricultrual crop and forestry/hail insurance?
Loss of crop due to weather or disease
What is bloodstock / livestock?
bloodstock = racehorses livestock = sheep / cows etc
What does contingency insurance cover for event cancellations?
cost of refunding tickets and rearranging event if possible
What does contingency insurance cover for over redepmption?
Insurance triggered when normal level of sales + safety margin exceeded for redemption of a coupon
Describe personal accident insurance
- covers against accidental injury, normally subject to a number of exclusions
- benefit policy
Describe personal accident and illness/sickness insurance
- similar to personal accident
- insurers keen to not pick up long-standing chronic conditions
Describe kidnap and ransom insurance
- pays ransom, medical / psychological treatment of insured
- pays for hostage negotiators
What will insurers consider for kidnap and ransom insurance?
who is insured and what makes them a kidnap target?
what is their personal security like?
confidentiality of policy
What is covered under construction insurance (CAR)?
- loss or damage to building works
- machinery movement
- BI
- EL and PL
- damage to plant used for installation or construction
What is the most important extension in construction insurance (CAR)?
Expediting expenses, covers for extra costs like over time and air freight charges for obtaining parts arising after damage
What are normal exclusions under construction insurance (CAR)?
- defective design, materials, or workmanship
- existing property
- breakdown or explosion
- anything contractor is not liable for under contract
- wear and tear or deteriation
What will insurers consider when looking at construction (CAR)?
- experience of contractors
- contracts entered into
- where / when construction taking place
- sum insured
What does erection all risks cover?
loss or damage to owned equipment as well as liability cover should insured or their equipment cause any incident on-site
How can property insurance be split into three parts?
- buildings
- machinery
- stock
What are typical heads of cover in all risks property policies?
- fire
- lightening
- explosion
- earthquake
- aircraft
- riots / strikes
- malicious acts
- storm / flood / escape of water
- impact damage
- sprinkler leakage
- subsidence
What are the three groups of exclusions in property insurance?
- risks the insurer will never cover (e.g. radioactive contamination or anything that should be covered under another policy like motor)
- may insure after consideration
- provided as buy-backs
What are typical buy backs in property insurance?
- fraud and employee dishonesty
- theft
- jewellery
- goods in transit
What is reinstatement?
Insurer takes over the property to make good again
What are notable exclusions for theft insurance?
- inside job / collusion
- entry by keys or tricks
What is pecuniary insurance?
loss suffered is monetary or financial
What is money insurance?
All risks of loss of money - risk associated measured by negotiability
What is negotiability?
Ease of transfer
Cash highly negotiable
Cheques not negotiable
What is fidelity guarantee insurance and what are the three bases of cover?
Covers loss of property due to a fraudulent act during policy
- blanket cover for all employees
- named employees only
- named roles only
What does standard BI insurance cover?
Replace income lost due to physical loss or damage to insured’s property
Excess expressed in terms of days
What is contingent BI?
Non-physical damage BI, i.e supplier of raw materials suffers loss affecting work, or power supply fails etc
What is supply chain insurance?
Covers BI where supply chain fails - can nominate specific suppliers and supplies to be covered
Describe D&O insurance
- protects directors and officers from claims from shareholders / investors because behaviour has lead to financial loss
- includes costs of litigation
- claims made basis
What are the main exclusions in D&O
- fraud
- insured persons making financial gain
- pollution / radiation / war
- anything done by insured person prior to firm becoming subsidiary of insured firm
What are typical extensions of D&O policies
- automatically adding companies acquired after inception date
- employment claims
Describe professional indemnity insurance
- compulsory insurance for certain professions under Solicitors Act 1974
- claims made basis
What is covered under public liability insurance?
- accidental injury of any third party
- accidental loss or damage to property belonging to third party
- interference with third parties right to light, air, or water
What is contributory negligence?
The injured persons share of the blame
What does products liability insurance cover
indemnity for injury or damage arising out of or in connection with a product
What is the main issue with claims made under PL or PPL insurance?
proof and contributory negligence
Describe EL
- injury for any employee
- compulsory in the UK
- causation basis (opposite of claims made)
- legal costs of defending any claims also covered
What is the Employer’s Liability Tracing Office?
- keeps track of all EL policies since 2011
Describe workers compensation insurance
- compulsory for employer to purchase WC or contribute to state scheme
- injured party doesnt need to show negligence
- if employee cant go back to job, insurance pays for retraining to another role
What is general liability coverage?
Combines EL and PL policies as well as others
Desrcibe financial guarantee insurance
- requires special permission to write, more likely if premium < 2% syndicates capacity
- specified events only, such as FX change, IR change, or financial failure of companies
What does product recall insurance pay for?
- advertising to recall product
- shipping in affected producst
- redistribution costs
What are exclusions in product recall insurance
- loss of income
- redesign / re-engineering products
- anything that should’ve been reasonably foreseen by the insured
What perils does a typical political violence cover?
- terrorism
- sabotage
- riots, strikes, and civil commotions
- malicious damage
- mutiny
- rebellion
- awr
What does cyber insurance cover
Loss or damage relating to loss of information from IT systems and networks etc
What’s the difference between and first and third party cyber policy
First person covers your property, extortion, reputational damage
Third person covers cyber breaches, legal costs relating to etc
Describe mergers and acquisitions insurance
- buyers / sellers can buy warranty and indemnity insurance in case of breaches
When does aircraft physical damage cover?
- in flight
- stationary
- taxiing
What is the outcome of an aircraft disappearing?
treated as a total loss
What is the minimum insurance required for a commercial drone operator?
750,000 Special Drawing Rights = £820,000
What does airline liability third party bar passengers insurance cover?
injury to ground crew / others if two aircraft collide on the air / gound
What does passenger liability cover?
injury during onboarding, during the flight or disembarking
What are typical exclusions for passenger liability?
- landing and take-off areas not meeting certain criteria
- carrying more than max passengers
- war / hijacking
what is airport operator premises liability?
essentially PL for specified premises and bodily injury / property damage must be fault of insured - extends to work done by insured or employees
what is airport operator hangar-keeper liability?
covers damage or loss to non-owned aircraft whilst on ground and in the care of insured
what is airport operator products liability?
same as normal product liability
What are the two sections of aviation war insurance?
- loss / damage to aircraft
- extortion / hijacking
What is contingent hull, liability or war aviation insurance?
insurance for banks which lend money to buy aircraft
When does space insurance kick in?
when engines are ignited
What covers satellites after launch?
liability coverage, international law states launchers of any satellite into space is responsible for any third part damage or injury
how does vessel construction insurance work?
insured keeps insurer up to date with values at risk so there is no risk of underinsurance
- defects in design etc not covered but consequential loss is
what does hull insurance cover?
physical damage to vessel for named perils, very few exceptions in hull wordings - all can be bought back except radioactive contamination
what is general average?
principle in maritime law that says if someone makes a sacrifice to save another everyone chips in to pay back their sacrifice
what is salvage insurance?
reward paid to rescuers in event of of being in trouble at sea
how do hull and cargo insurance compare?
cargo policies have far more exclusions which are less likely to be able to be bought back
what are the three main risks in an exploration policy?
- blowout
- costs of redrilling the well incase of blowout
- seepage, pollution and contamination costs due to blowout
what does an exploration policy cover?
any well:
- being drilled
- while producing
- while shut donw
- while plugged and abandoned
describe control of well coverage in an exploration policy
covers costs of attempting to regain control of a well, does not cover damage to equipment or BI
describe re-drilling coverage in an exploration policy
covers cost of redrilling to point it was being blowout
insurer will only pay what is deemed prudent
does not cover any losses relating to wear and tear or abandoned wells
what are some coverage extensions to an exploration policy?
- making the well safe
- underground control of well
- removal of wreck
- care, custody and control
What is covered by an energy CAR policy?
- physical damage and all elements should be advised to insurer, removal of wreck also covered
- liability, number of exclusions including D&O, damage to wells insured is drilling, and any COW losses
what is a protection and indemnity club?
mutual set up by shipowners to pay for liability insurance
What risks are covered by marine liability?
- cargo
- crew
- collision
- third party liability
- pollution
- wreck removal
- fines
what is the kimberly process?
seeks to ensure diamonds being traded are not blood diamonds
what is contract frustration?
a contract which cannot be fulfilled
what does bond risk insurance cover?
covers other party should an insured default on a bond
