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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

What is agricultural crop and forestry/hail insurance?

A

Insurance for anything farmed commercially as a crop, that could be lost due to weather or disease.

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2
Q

What is bloodstock/livestock insurance?

A

Insurance for animals. Bloodstock insurance is for horses, and isnures against sickness, loss in value, or total loss. Livestock is all other animals, and normally includes loss by disease

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3
Q

What is concert/event cancellation/abandonment contingency insurance?

A

Insurance that covers the cost of refunding tickets and rearranging the event

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4
Q

What is over redemption contingency insurance?

A

Used if a promotion (coupons etc) causes a company to lose the extra profits, such as if too many people used them

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5
Q

What is prize indemnity contingency insurance?

A

Insurance for a prize that may be valuable.

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6
Q

What is personal accident insurance?

A

A benefit policy for personal injuries

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7
Q

What is persoanl accident and illness/sickness insurance?

A

Personal accident cover, and also cover for acute sickness

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8
Q

What is kidnap and ransom coverage?

A

Insurance for kidnap, ransom payment and other associated costs.

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9
Q

What percenateg of Lloyd’s business is property?

A

about 25%. Same for IUA companies

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10
Q

What is construction insurance?

A

Normally contractor’s all risk insurance- a blend of property and liability isnruance

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11
Q

What are the three main types of standard property insurance?

A

Insurance for buildings, machinery, and stock

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12
Q

What are key risks for property policies?

A

fire, lightning, explosion, earthquake, aircraft, riot, malicious act, flood

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13
Q

What is onshore energy insurance?

A

A type of property insurance that is specific to the energy industry, but is written similarly to prooerty, concerned about location, acivity, and teh risk

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14
Q

What are other types of property insurance?

A

Glass insurance, or stock insurance

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15
Q

What are common exclusions in theft insurance?

A

Collusion, and entry gained by tricks or keys

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16
Q

Define ‘negotiability’

A

How easy it is to transfer something- ie cash is easy, cheques are hard

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17
Q

What is directors and officers’ liability insurance?

A

D&O- covers directors and officers for any loss in value of the company caused by their behaviour

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18
Q

When do D&O claims generally arise?

A

When a shareholder alleges that wrongdoing by the directors has reduced tthe value of their investment

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19
Q

What basis are D&O policies written on?

A

Claims made

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20
Q

What is the extended reporting period for D&O?

A

Allows a claim to be received after the polciy has expired- but extensions never nromally exceed 12 months

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21
Q

What is E&O insurance?

A

Errors and omissions, synonymous with professional indemity,

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22
Q

On what basis is E&O normally written?

A

Claims made

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23
Q

What is the employer’s liability tracing office?

A

A ddatabase that keeps records of all employer’s liability polciies since 2011- when it was etsablished. this is os people can trace tehir former employers if they need to make a claim

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24
Q

What is employer’s liability called in the US?

A

‘Worker’s compensation’ and includes medical expenses

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25
Q

What is financial guarantee insurance?

A

insurance for events like financial failure of companies, change in interest rate, change in property value

26
Q

What rules have to be followed to write financial guarantee insurance in Lloyds?

A

Permission is sought normally through business plans, but is more likely to be accepted if the premium for the class of business is less than 2% of syndicate capacity

27
Q

Why is FG insurance a challenging line to write?

A

You run the risk of alloqing the isnured to gain, not just protect against loss

28
Q

/What is malicious product tamper/contamination insurance?

A

Insurance for when people try to tamper with a comapny’s product to extort them. This kicks in when someone is harmed by the product

29
Q

What does a typical politucal violence policy cover?

A

Terrorism, sabotage, riots, malivious damage, revolution, coup, and war

30
Q

What does politcial violence insurance normally interact with?

A

Property insurance

31
Q

What is the main London Market aviation insurance divided into?

A

Section 1: damage to aircraft, section 2: liability for passengers. section 3: liability for other parties

32
Q

What do insurers like to do when claims are being made on the physical damage of an aviation policy?

A

They like to be present when the plane is being dismantled or when repairs are taking place

33
Q

Do commercial drones need insurance?

A

Yes! Of 750,000 Special Drawing Rights (just an international currency)

34
Q

What does passenger liability on airlines cover?

A

Accidental bodily injury when enetering, on board, or leaving the plane, as well as any damage to their cargo or baggage.

35
Q

What does third party airline liability insurance normally cover?

A

Things like a collisoon of two aircrafts, or the ground crew facing injury

36
Q

What sections does aviation war insurance have?

A

Section 1 is loss or damage to the aircraft, section 2 is extortion or hijack

37
Q

What is one of the exclusions of aviation war insurance?

A

war breaking out between the five permanent members of the UN security council

38
Q

What is loss of license insurance?

A

Insurance for a member of aircrew losing their license to fly. It is a benefit policy

39
Q

What is loss of use insurance?

A

BI for aircrafts

40
Q

What does aviation repossesion insurance cover?

A

The cost of repossessing an aircraft and reconstructing any technical records it had

41
Q

What is contingent hull, liability, or war insurance?

A

Often, banks lend money for the purchase of an aircraft. This insurance protects the bank’s interest if the original policy covering teh aircraft does not.

42
Q

What area of insurance does space isnurance lie in?

A

It is not only aviation, it is also marine

43
Q

When does space insurance normally kick in?

A

once the rocket intentionally ignites

44
Q

When vessels are covered for construction, what four areas are covered?

A

Physical loss or damage, collision liabilities, war, strikes, terrorism, and political acts

45
Q

What percentage of collision liability does standard hull policy cover?

A

Only 75%. The other 25% has to be bought from somewhere else

46
Q

What is general average in maritime law?

A

The principle where if someone makes a sacrifice to save everyone else, everyone else chips in to pay them back. The insurer will pay this on a standard policy

47
Q

What is salvage in marine insurance?

A

The reward you pay someone for rescuing you

48
Q

What is cargo?

A

Anything that can be carried by any form of transportation, not just by sea

49
Q

Which coverage tends to be more exapnsive- cargo policies or hull insurance?

A

Hull insurance

50
Q

What does exploration off-shore energy insurance usually cover?

A

Covers the physical damage on rigs hired for exploration, the first phase of generating energy

51
Q

What are three main risks considered for oil and gas, covered in exploration policy?

A

A blowout where oil or gas comes to the surface, the cost of redrilling the well, and any seepage or contamination from this

52
Q

What are common extensions to the coverage of wells?

A

Making the well safe, underground control of teh well, removal of teh wreck, care, custody and control of equipment

53
Q

What is construction insurance for offshore energy?

A

Construction of a permanent rig

54
Q

What two sections does a construction all risks (offshore energy) policy have?

A

Section 1is for physical damage, Section 2 is for liability

55
Q

What is operational offshore policy?

A

For the operations of a rig

56
Q

Unusually, what does shipowners liability insurance cover?

A

The employees of a ship- crew

57
Q

How is motor insurance reported in Lloyds?

A

EU/EEA insurance, USA and Canada insurance, and rest of the world

58
Q

How is most motor insurance written in Lloyds?

A

Through delegated authorities, who have better local knowedge

59
Q

Define ‘portfolio management’

A

“making chhoices in terms of the business written, which makes sure that the long-term finanical objectives of the investors are met”

60
Q

What does Lloyds require managing agents to do regarding ESG?

A

Managing agents must have a responsible investment strategy which clearly uses non-financial risk factors in investment decisions

LM2 (10 decks)

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