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LM2 > Chapter 2: Risks written in the London Market > Flashcards

Chapter 2: Risks written in the London Market Flashcards

1
Q

Agricultural crop and forestry/hail insurance

A

Anything farmed commercially

Main peril is the loss of the crop due to weather/disease

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2
Q

Bloodstock insurance

A

Covers racehorses and show jumpers

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3
Q

Livestock

A

Covers all animals (including fish) that can be reared commercially

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4
Q

Contingency insurance: concert/event cancellation

A

Covers the cost of refunding tickets and rearranging the event to try recoup some cost

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5
Q

Claiming on a racehorse

A
  • usually when they have to be euthanised
  • pay out is the insured value of said racehorse
  • claims can be made on depreciation in value of the horse if it fails to breed
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6
Q

Claiming on a racehorse

A
  • usually when they have to be euthanised
  • pay out is the insured value of said racehorse
  • claims can be made on depreciation in value of the horse if it fails to breed
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7
Q

Things to consider on Contingency risks from UW perspective

A
  • are the enough rest breaks between dates (score for re-arranged dates)
  • venue for a one off event
  • the health of performer and their family
  • whatever the cancellation/refund policy is on tickets being sold
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8
Q

Typical contingency claims

A
  • cricket cancelled due to rain
  • concert cancelled due to artist health
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9
Q

Overredemption

A
  • volume of vouchers being redeemed outweighs the cost so extra profits are reduced
  • risk can be insured based on the normal level of sales
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10
Q

Prize indemnity

A
  • winning a prize at a charity event (hole in one contest) that is of high value may be covered by insurance
  • UW calculates the odds of the incident occurring
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11
Q

Personal accident insurance

A

Covers against accidental injury (subject to exclusions and disclosure)

Benefits policy - pay predetermined amount in the event something.

Different levels of payout depending on severity of injury

Paid weekly/monthly for an agreed period. If no improvement after that period, can be paid permanent total disablement

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12
Q

Permanent total disablement

A

Lump sum payment after the agreed period of PA insurance if condition has not improved

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13
Q

PA and illness/sickness

A

PA policies may offer coverage for illness as well as accidents

Cover sudden onset illnesses such as heart failure rather than chronic longstanding conditions

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14
Q

Kidnap and ransom (K&R)

A

Payment of the ransom itself if the insured is kidnapped

May also include medical/psychological treatment after the event

Another main area of coverage is payment for team of hostage negotiators

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15
Q

Considerations for writing K&R

A

Who is insured and what makes them targetable

What is the nature of their personal security (will often send in security experts to assess)

Confidentiality after risk is written the identity of the insured is kept confidential

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16
Q

Construction insurance (CAR)

A

Larger projects it makes more sense for head contractor to take out CAR insurance rather than each sector take out their own

To avoid paying claim, insurer will have to process the loss being claimed fell within one of a number of exclusions

Policy terminates at the end of construction

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17
Q

Claims on CAR policies

A
  • policy period needs to take into account if insurer is still on risk if work has been handed over
  • claims must work out if still applicable

-occasionally there is a maintenance period (no longer than 12 months) to see over handover/completion

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18
Q

What is covered under a CAR policy

A
  • loss or damage to the building
  • machine movement
  • business interruption
  • public/employers liability
  • damage to plant (machinery) which is used for construction/installation
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19
Q

Extensions to CAR policy (if required)

A

Cost of restructuring plant

Breakdown/explosion of machinery

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20
Q

Reconstructing plans

A

Redrawing of plans lost in flood or explosion

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21
Q

Expediting expenses extension (CAR)

A

Covers extra cost to cover paying overtime or air freight charges required to ensure repairs/rebuildings are done as quickly as possible

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22
Q

Exclusions for expediting expenses

A
  • defective design/materials or workmanship
  • existing property
  • breakdown/explosion
  • anything contractor is not liable for under contract
  • wear/tear/deterioration
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23
Q

Considerations when writing CAR

A
  • experience of contractor
  • all contracts entered in by contractor, employer and sub contractors
  • contract value - sum insured (often have scope for value increased during the period)
  • when and where it’s taking place
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24
Q

CAR Claims

A

Injury claims because of people falling
Sinking due to rainfall
Parts of structure do not fit together properly
Collapse of equipment (I.e crane) will be damaged itself but also may cause damage to environment

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25
Q

Erection all risks

A

Can be absorbed into a CAR policy

  • covers loss/damage to owned equipment as well as liability cover should said equipment cause damage
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26
Q

Erection all risks

A

Can be absorbed into a CAR policy

  • covers loss/damage to owned equipment as well as liability cover should said equipment cause damage
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27
Q

Property (buildings) insurance

A

Can vary from refineries/chemical plants to shops and offices

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28
Q

Property (machinery) insurance

A

Varies depending on the type of building

Includes plant/fixtures/fittings/office equipment, computers and money

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29
Q

Property (stock) insurance

A
  • Can include raw materials, materials in production process nad finished stock stored on-site
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30
Q

Typical heads of cover in an all risks policy

A
  • Fire (including underground fire)
  • Lightning
  • Explosion
  • Earthquake
  • Aircraft
  • Riot/strikes (Public Order Act 1986)
  • Malicious Acts
  • Storm, flood or escape of water
  • Impact damage (third party vehicle/animal)
  • Sprinkler leakage
  • Subsidence
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31
Q

3 categories of property exclusions

A
  • Risks/losses/damage to property that they will never cover
  • Risks that may be covered after considering the risk presented (inventory shortage/freezing)
  • Risks that insurer usually provides as ‘buy-backs’ (i.e. risks the insured can pay additional premium to buy cover for the excluded)
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32
Q

Reinstatement

A
  • Used in property insurance as a way of indemnifying the insured in the even of a loss
  • Insurer agrees to make good the lost/damaged property.
  • Have restore building to pre-loss condition
  • May not be possible to apply reductions for wear and tear
  • must make sure sum insured is adequate to pay for the reinstatement activities
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33
Q

Reinstatement memorandum

A
  • Cases where underinsurance or average applies

triggers the application of the average clause if the sum insured represents a % of the full reinstatement value

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34
Q

Day One Average Memorandum

A
  • used to try to counteract the impact of inflation given that reinstatement may take several years
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35
Q

Onshore energy risk

A
  • Property risk where subject matter insured is specific to energy industry
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36
Q

Considerations when writing onshore energy

A
  • Location
  • Activity
  • Risks being created by the nature of the activity

Claims will be similar as other property (Fire/explosion)

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37
Q

Glass insurance

A
  • Covers fixed glass and will provide cover for boarding up, replacing alarms, lettering and frames
  • useful if you dont need full property
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38
Q

Stock insurance

A
  • Covers raw materials
  • form of physical damage insurance and set up in a way that there is an agreed sum insured (should be max exposure the insured faces)
  • Pay deposit of premium at start of the policy and make regular declarations with balancing payments
  • claims include theft or damage
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39
Q

Theft insurance

A
  • Insurers require “Forcible entry or exit of the premises”
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40
Q

Perils excluded from theft policies

A
  • Fire
  • Money
  • War
  • Collusion
  • Entry gained by using tricks or keys
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41
Q

Pecuniary insurances

A
  • Monetary/financial loss rather than physical injury
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42
Q

Money insurance

A

Covers all risks of loss to money which is under the responsibility of the insured.

Not just cash, includes cheques, stamps, vouchers, lottery and travel tickets

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43
Q

Negotiability

A
  • Concept of ease of transfer
  • cash can be passed person to person, vouchers can be handed off
    *freely negotiable

Cheques are not usually freely negotiable.

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44
Q

Non-negotiable documents claims

A

Issue is whether stolen documents can be reconstructed

  • insurer will pay the cost of reprinting
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45
Q

Fidelity guarantee insurance

A

Covers loss of property as a direct result of fraud

most policies cover even if an employee has left (for up to 24 months AFTER)

Insurer will look at internal processes

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46
Q

3 bases of FG insurance

A
  • Blanket cover for all employees
  • Named employees only
  • Named roles only
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47
Q

Examples of internal risk management an insurer will require and Insured to do for an FG policy

A
  • Obtaining and checking references of employees
  • Correct procedure for cheques and other money movement
  • Regular checking of cash kept on premises
  • daily banking of any cash/cheques coming in
  • bank account reconciliation
  • procedure for stocktaking
  • full audit at least once a year
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48
Q

Business interruptions insurance

A
  • assists with replacing outcome missed out on due to physical loss
  • set out waiting period and maximum payout time
  • claims require some physical loss/damage to have occured to insured property
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49
Q

BI insurance sum insured calculation

A
  • Work out an amount for each day/week/month which represents the maximum indemnity payment during the interruption

deductible/excess = waiting period (in days)

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50
Q

Waiting period

A

if waiting period set at 14 days and you return to work after 7 days you cant make a claim

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51
Q

Contingent business interruption

A
  • Where supplier has suffered there own loss and cant supply insured
  • Insured power supply is cut off due to local powerstation
  • covers indirect losses due to loss or damage at 3rd party premises.
  • Also have waiting periods and finite days/months of coverage
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52
Q

Supply chain insurance

A
  • insurance designed to cover the situation where the insured’s business is interrupted because another party lets them down.
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53
Q

Homeowners insurance

A
  • property risk
  • same type of risk as commercial property, including damage to buildings caused by various perils
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54
Q

D&O liability insurance

A
  • protects senior personnel from claims made by shareholders because of their decisions causing financial loss
  • either US and non-us
  • Either financial institutions or non-financial institutions
  • covers damage and legal cost but not necessarily punitive damages
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55
Q

D&O exclusions

A
  • Fraud
  • Insured persons making a financial gain
  • Anything that was already being investigated by authorities
  • Anything notified to prior insurer
  • Pollution/radiation/war
  • Anything done by an insured person prior to the firm becoming a subsidiary of the insured firm
  • Bodily injury/emotional distress
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56
Q

D&O extensions

A
  • automatically adding in any companies acquired after inception as long as insurer is notified prior
  • Employment claims
  • Extension of the policy if not renewed
  • Representation costs for insured persons being asked to appear before investigators
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57
Q

D&O Claims

A
  • Arise when shareholder alleges wrongdoing by director or officer that has reduced the value of their investment
  • Can also arise from possible breaches of legislation
  • Includes cost of defending a director/officer for breach but will not pay if found guilty
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58
Q

D&O policy example

A

Policy expires 20/10/2020 but has extended reporting period until 19/10/2021

Claims that come in before 19/10/2021 can be advised to original insurer as the wrongdoing happened before 20/10/2020

If the wrongdoing was after 20/10/2020 or claim was made by investor after 19/10/2021 then policy cant be triggered

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59
Q

Errors and Omissions (E&O)/PI and professional negligence

A
  • interchangeable and covers all types of claims made against professionals
  • Compulsory under Solicitors Act 1974 for any authorised SRA members
  • protects innocent victims
  • Claims made policy
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60
Q

PI claims

A
  • claim as a result of business activity against the insured
  • covers damages and legal costs
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61
Q

Types of reasons for PI claims

A
  • Negligence or breach of duty of care
  • Negligent misstatement / misrepresentation
  • IP infringement
  • breach of confidence / misuse of any information
  • Defamation
  • Dishonesty of employees
  • Other civil liability
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62
Q

PI exclusions

A

Excludes losses caused directly/indirectly by

  • Investment
  • Operation of pensions/employee benefits
  • Sale/purchase of stocks/shares
  • Breach of tax/competition legislation
  • Pollution/war/nuclear risks
  • Cyber risks
  • Any liability assumed under contract which is greater than non-contractual liability would be
  • Anything that can be insured elsewhere
  • Deliberate/reckless/dishonest acts
  • fines and penalties
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63
Q

Medical malpractice claims

A
  • if problem arose during childbirth or later, child and parent can be claimant
  • claims can arise a long time after alleged negligence as there is no time limit imposed in law.
64
Q

Public Liability

A

legal liability coverage for

  • accidental injury to any person (third party)
  • accidental loss of or damage to property
  • Nuisance, trespass to land or intereference with any third party
65
Q

PL exclusions

A
  • liability from using mechanical vehicles
  • liability out of ownership possession or use of aircraft
  • anything that would be covered by EL
  • any damage to property owned or cared for by insured
  • War/radioactive contamination
  • Product defect and recall
  • Professional risks
  • Any liability assumed under contract
  • Asbestos
  • Pollution
66
Q

PL Claims

A

Wide range from

  • individual slipping over
  • larger claims from people injured from train derailment/catching fire
  • issue is where the insured is actually liable and to what extent
67
Q

Product liability

A
  • can be purchased by any entity which has potential to be sued as part of the below processes of a product:

manufacturing
distribution
wholesale
retail
repairing
servicing
maintaining

68
Q

Product liability exclusions

A
  • damage to products by the insured
  • Liability arising out of the recall of a product
  • liability for repairing/replacing a product
  • liability from faulty design
  • Anything covered by EL
    -Any liability incurred under contract if the wording makes insured liable
  • Anything from a deliberate act
  • Fines or penalties
  • War/Terrorism/radioactive contamination
  • Liability to owned property
69
Q

EL

A
  • not generally written in London Market
  • compulsory in the UK
  • Legal liability for insured firm for injuries to employees and
  • covers legal costs too
  • Called workers Comp in the US
70
Q

ELTO

A

Employers’ Liability Tracing Office

  • keeps record of all new and renewed EL policies since 2011
  • Allows claimants to easily find the insurers responsible for particular employers
71
Q

Workers Compensation

A
  • Compulsory in the US
  • Strict liability which means injured party does not need to show any negligence on employer
  • Short waiting period
  • Employee/employer chooses the doctor
  • Covers medical expenses
  • if injured employee cant return to previous job, will be re-trained
  • Some occupation-specific workers compensation regimes (LHWCA for dock workers)
72
Q

LHWCA

A

Longshoreman and Harbour Workers Compensation Act

EL coverage for Dock Workers

73
Q

CGL

A

Commercial General Liability policies

  • cover EL/PL
  • also includes advertising liability
74
Q

Active Shooter insurance

A
  • covers litigation faced by insured resulting from harm involving guns and other weapons
  • post event counselling
  • cost of crisis management
75
Q

FG

A

Financial Guarantee insurance

pays out as agreed when an event occurs including:

  • financial failures of companies
  • lack of response or support from financial supports
  • changes in interest rates
  • changes in rates of exchange
  • changes in property values
  • on the edge of gambling
76
Q

Extortion/Malicious product tamper insurance

A
  • Someone extorts a firm by alleging their products have been tampered with
  • assists with the financial impact of addressing the issues
  • insurance for accidental contamination is only triggered if it causes illness
77
Q

Retailer considerations when being extorted

A
  • Checking and removing unsafe goods
  • Maintaining brand image
  • Making sure alternative goods available
  • Maintaining client confidence
78
Q

Product recall insurance

A
  • can be linked with contamination insurance or as a stand alone product

pays for
- advertising to publicise recall
- Any additional employee costs
- Rental costs of additional space to deal with recall
- Shipping in affected products
- disposing of the products
- redistribution costs

79
Q

Product recall exclusions

A
  • Liability claims made concerning the product
  • products which are in fact part of somebody else’s finished product
  • loss of income
  • financial loss incurred because competitor recalled product as well and there was nothing wrong with insured product
  • redesign/re-engineering costs
  • anything that couldve been foreseen
  • failure to adhere to recognised standards
80
Q

Political Violence insurance

A
  • looks like a property policy (in terms of subject matter insured)
  • perils are categorised by those caused by humans than natural catastrophe
81
Q

Perils covered under a PV policy

A
  • Terrorism
  • Sabotage
  • Riots, strikes and civil commotion
  • Malicious damage
  • Insurrection, revolution or rebellion
  • Mutiny or coup d’etat
  • War/Civil war
82
Q

Cyber insurance

A
  • cover loss relating to the damage to or loss of information from IT systems and networks.
  • covers paying for the costs of the immediate aftermath
83
Q

1st party Cyber

A

cover your own assets which includes property, digital assets, extortion and reputational damage

84
Q

3rd party Cyber

A

cover risks of security breaches which lead to loss of others data and legal costs linked to that

85
Q

Warranty and indemnity insurance

A

Seller or buyer of a merger/acquisition look to protect themselves in case negotiations break down or if warranties have been breached

  • policies will look to closely match actual terms of M&A
86
Q

W&I insurance: Seller

A
  • Give a cleaner exit
  • Allow them to use sale proceeds to share with investors rather than holding onto funds
87
Q

Aviation: Physical damage insurance

A

covers:

  • Commercial fixed wing aircraft
  • Commercial rotary aircraft
  • Private aircraft
  • Microlights
  • Hot air balloons
  • Covers accidental damage whilst either
  • Flying
  • on the ground
  • taxiing
88
Q

Insurer perspective if an aircraft disappears

A
  • considered total loss
  • if it is subsequently found, it belongs to the insurer if the loss is paid
89
Q

Physical damage aviation exclusion

A
  • Wear and tear
  • breakdown
  • foreign object damage unless proven to be from a single incident
90
Q

Aviation: Physical damage claims

A
  • insurer requires chance to be present when plane/engine dismantled/repaired
  • insurer pays for reasonable cost of repairs
  • if they pay out total loss, they have the right to sell remaining parts as salvage
  • often leads to negotiated settlement
91
Q

Airport property insurance

A
  • standard policy
92
Q

Drone/unmanned aerial vehicle

A

covers both physical damage (theft/cyber) annd liabilities for bodily injury

93
Q

Aviation regulation in the UK with drones

A
  • required to have insurance in place to get a license to fly a drone commercially
94
Q

Airline Liability insurance: 3rd party other than passenger

A
  • covers usual amounts of damages
95
Q

Airline liability exclusions

A
  • Employees
  • Operational crew
  • Passengers
  • Owned Property
  • Noise pollution
96
Q

Type of losses under airline liability

A
  • collision between 2 aircraft
  • injury to ground crew loading cargo/baggage
  • investigation will look at the extent to which the insured was liable
97
Q

Passenger liability

A
  • covers them for accidental. bodily injury
  • governed by international conventions
98
Q

Passenger liability exclusions

A
  • Geographical operating limits
  • No use of aircraft for illegal purposes
  • Only listed individuals can be used to fly
  • Any transportation of the aircraft by another method
  • landing and take off areas that dont meet certain criteria
  • taking on contractual liability
  • Carrying more than max passengers
  • War/Hijacking/nuclear
99
Q

Airport operators liabilities

A
  • Premises (essentially PL)
  • Hangar-Keepers liability
  • Products liability
100
Q

Wholesale grounding

A

When there is a problem with one aircraft and Government aviation authorities order all of the same to be grounded pending investigation.

101
Q

Aviation War

A

2 sections

  • Loss/damage to aircraft
  • Extortion/Hijack
102
Q

Aviation War exclusions

A
  • War breaking out between 5 UN security council members
  • Confiscation or nationalisation of assets
  • Use of chemical, biological, radioactive or EMP
  • Debts and repo of aircraft
  • Delay and loss of use
103
Q

Loss of licence insurance

A
  • covers members of aircrew who lost their licence due to injury/severe illness
  • Income replacement insurance
104
Q

Loss of use insurance

A
  • Similar to BI, aircraft cant earn money
105
Q

Aviation reposession insurance

A
  • Banks have interest as they lent money using aircraft as security
  • insurance covers costs of repossessing the aircraft and of reconstructing any technical records.
106
Q

Contingent hull, liability or war

A
  • insurance purchased by the bank should they not be able to collect on the main policy for reasons outside of their control (aircraft lost/damaged and doesnt pay)
107
Q

Space Insurance

A

Pre-launch is covered by Cargo market

  • only involved once rocket engines ignite
  • split between property and liability
108
Q

Satellite property insurance

A

total loss = catastrophic explosion/failure of vital part

partial loss is one thing stops working

109
Q

Satellite insurance: Partial loss

A
  • Financial value of loss is key
  • defined as degradation/reduction in expected performance or life expectancy
110
Q

Satellite liability

A
  • After launch, liability continues and owner are still responsible for any injury/damage to 3rd party property/person
111
Q

Vessels construction insurance

A
  • Works mostly like non-marine construction
  • can cover both shipbuilder and eventual owner
  • important to update values to avoid underinsurance should a claim be made
112
Q

4 elements of Vessel CAR

A
  • All risks of physical loss/damage
  • Collision liabilities/marine liability (P&I)
  • War
  • Strikers, terrorism, malicious acts and political motives
113
Q

Example Vessel CAR claims

A
  • fires in shipyard
114
Q

Physical damage to Vessel

A
  • Main coverage specifies named perils
115
Q

Physical damage to vessel perils

A
  • Perils of the seas (not including normal wind and waves)
  • Fire
  • Explosion
  • Violent theft from outside the vessel
  • Jettison (damage done throwing goods overboard)
  • Piracy
  • Breakdown/accident to nuclear reactors
  • Contact with aircraft, objects falling
  • Earthquake, volcano, lightning

Additional perils can be included following due diligence
- Accidents in loading
- Bursting boilers (insurance only pays for consequential damage)
- Negligence of masters/crew/pilot
- negligence of any repairers/charters unless they are the insured
- Barratry

116
Q

Barratry

A
  • Master and crew turn against the owner of the shop and steal it
117
Q

Standard Hull exclusions

A
  • War
  • Strikes and terrorism
  • Malicious damage
  • Radioactive contamination
118
Q

Collision liability

A

liability to pay for damage to another vessel or her cargo should the insured collide

standard policy only covers 75% rather than 100%

119
Q

General Average

A
  • Someone makes a sacrifice/incurs cost to save everybody else, everybody else will chip in to pay them back

Insurer will pay the insured contribution to the party owed

120
Q

Salvage

A

Someone coming to rescue you when youre in trouble at sea

Hull insurer will pay the ships share of any reward for

121
Q

Sue and Labour

A

Insurer pay reasonable costs incurred in addition to any total loss under the policy

122
Q

Cargo

A
  • not limited to sea

3 levels of cover

  1. All risks
    2+3. combination of named perils
123
Q

Cargo perils: Class A

A

All risks of loss or damage

124
Q

Cargo perils: Class B and C

A
  • Fire/explosion
  • Stranding
  • Overturning
  • Collision
  • Discharge at a port
  • General Average
  • Jettison

B will also include:
- Earthquake/Volcano
- Entry of sea/lake/river water
- Total loss of any package overboard

125
Q

Cargo Exclusions

A
  • Wilful misconduct of the insured
  • Inherent vice, wear and tear, natural loss in weight/volume
  • Insufficiency of packing to withstand the journey
  • Delay even though it might be caused by an insured peril
  • Insolvency
  • Use of atomic weapons/devices
  • Deliberate damage
  • Unseaworthiness of the vessel/container
  • War
  • Strikes/terrorism
  • Radioactive contamination
126
Q

Cargo contributions

A
  • like with physical damage insurance insurer will pay share of any contribution in salvage, general average or sue and labour expenses
  • does not cover the liability in cases where the cargo damages the transport vehicle it is being carried
127
Q

Offshore Energy: Exploration insurance

A

Covers

  • Blowout where oil/gas comes to surface uncontrollably
  • Costs of re-drilling the well should that happen
  • Any seepage, pollution and contamination costs arising from this
  • insured can buy coverage for any combination of the 3
128
Q

Co-venturers/Joint venturers

A

A number of parties all insured on the same policy that cover a project

129
Q

Exploration policies in the London market

A

Covers well:
- When being drilled or worked on until complete
- While producing
- While shut in
While plugged and abandoned

130
Q

Spudding

A

Starting the drilling of a well

131
Q

Exploration: COW

A

Control of well
-costs of regaining control of the well once out of control (including putting out fires)

  • doesn’t cover loss or damage to equipment
132
Q

Exploration: Re-Drilling

A

Cost of creating a new well to the point it was before the incident

  • insurer will only pay costs deemed to be prudent

Does not cover
- Loss/damage to equipment
- Loss/damage caused by delay
- Any costs incurred with drilling relief well
- Any re-drilling relating to a well already plugged
- Any losses where the blowout happened

133
Q

Exploration: Seepage and contamination/pollution

A

Pays for any injury/loss/damage to property caused by seepage and contamination

134
Q

Additional exploration coverages

A
  • Making the well safe
  • Underground control of well
  • removal of wreck
  • Care, custody and control
135
Q

Offshore Energy construction

A

covers whole construction period

2 sections
1. Physical damage and all elements being covered should be advised

  1. Liability. Bodily injury or property damage arising out of the project
136
Q

Items not covered under Offshore Construction Physical damage

A
  • Renewal of faulty welds
  • Vessels or aircraft
  • Placing the rig in the wrong place
  • Delay
  • Wear and tear
  • Any temporary works unless specifically agreed
137
Q

Items not covered under Offshore Construction Liability

A
  • Intentional violation of any law
  • injury to the insured’s employess or their family
  • D&O liability
  • Loss/damage to wells being drilled
  • Any costs in relation to COW
  • Fines
  • Any liability from seepage/pollution
138
Q

Operational insurance

A
  • Equivalent of ordinary property policy once the construction has been completed
139
Q

Shipowners liability

A
  • typically issued by a mutual. Shipowners specifically have clubs (P&I clubs) to insure each other
140
Q

Risks covered by marine liability insurers

A

Cargo
*Claims for short delivery, loss or damage

Crew
* Medical expenses, repatriation and arranging replacements
*Compensation for death/injury

Collision
*25% not covered by hull insurer
*wreck removal
*injury/death
*Liability for colliding with anything not a ship

3rd Party liability
*passengers, dockworkers, pilots, stowaways

Pollution
* sudden and accidental only

Wreck removal
* not necessarily after a collision

Fines
* not criminal just administrative

141
Q

Marine professional negligence

A

Operates the same as usual professionals insurance but typical involves maritime professionals

142
Q

Ports liability

A

similar to public and employers liability

liability to those vessels and personnel using the water areas which the port authority is responsible for

143
Q

Loss of hire/loss of earnings insurance

A
  • like BI but for ships
  • Pays out after waiting period
144
Q

Specie/Jewellers block

A
  • covers PD and liability specific to trading/dealing of gems, precious metals, valuable documents and manufactured jewellery
  • insurers concerned about security to see how it is being transported
145
Q

Kimberly process

A

Ensure diamonds being traded are not conflict/blood diamonds

146
Q

Fine Art insurance

A
  • covers private/public art collections

cover is for cost of repair but also depreciation after the repair/restoration occurs

147
Q

Standard exclusions for FA

A
  • Inherent vice and vermin
  • Anything re-framing or repairing
  • Anything climate related
  • Unattended vehicles
  • War/terrorism/radioactive
  • Cyber
  • Consequential loss
148
Q

Cash in transit

A

covers money being moved between banks/ATMs and customer deposits

  • doesnt include collusion
149
Q

Confiscation/expropriation/deprivation of assets

A
  • assets seized by overseas authorities
  • investment risk forced to be abandoned
  • fixed asset risks
  • mobile asset risks (plant and equipment)
  • Trade related risks
150
Q

Contract frustration / trade credit insurance

A

Contract cannot be fulfilled

cover losses arising from unilateral (one-sided) cancellation of a contract for no legitimate reason

can deal with practical issues like not being paid or not receiving goods

Contract frustration counterparty = government type org

trade credit counterparty = commercial entity

151
Q

Bond risks insurance

A

protect other party should insured default on their contract

152
Q

Motor insurance

A

Can be written both as physical damage and liability

153
Q

Portfolio management

A

making choices on the business written to make sure the long term financial objectives of the investors are met

appetite varies from insurer to insurer

154
Q

Diversification

A

spreading risk and reward to avoid having eggs in one basket

one loss might not impact the overall profit

155
Q

ESG issues

A

Environmental, Social and Governance issues

  • FCA set out their own strategy and insurers and intermediaries have to set out their own agendas whilst being mindful of how their actions are seen

Lloyd’s require managing agents to have a responsible investment strategy which takes into account non-financial factors

LM2 (10 decks)

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