Chapter 2: Risks Written in the London Market Flashcards
What is agricultural crop and forestry/hail insurance?
Insurance for anything farmed commercially as a crop, that could be lost due to weather or disease.
What is bloodstock/livestock insurance?
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
What is concert/event cancellation/abandonment contingency insurance?
Insurance that covers the cost of refunding tickets and rearranging the event
What is over redemption contingency insurance?
Used if a promotion (coupons etc) causes a company to lose the extra profits, such as if too many people used them
What is prize indemnity contingency insurance?
Insurance for a prize that may be valuable.
What is personal accident insurance?
A benefit policy for personal injuries
What is persoanl accident and illness/sickness insurance?
Personal accident cover, and also cover for acute sickness
What is kidnap and ransom coverage?
Insurance for kidnap, ransom payment and other associated costs.
What percenateg of Lloyd’s business is property?
about 25%. Same for IUA companies
What is construction insurance?
Normally contractor’s all risk insurance- a blend of property and liability isnruance
What are the three main types of standard property insurance?
Insurance for buildings, machinery, and stock
What are key risks for property policies?
fire, lightning, explosion, earthquake, aircraft, riot, malicious act, flood
What is onshore energy insurance?
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
What are other types of property insurance?
Glass insurance, or stock insurance
What are common exclusions in theft insurance?
Collusion, and entry gained by tricks or keys
Define ‘negotiability’
How easy it is to transfer something- ie cash is easy, cheques are hard
What is directors and officers’ liability insurance?
D&O- covers directors and officers for any loss in value of the company caused by their behaviour
When do D&O claims generally arise?
When a shareholder alleges that wrongdoing by the directors has reduced tthe value of their investment
What basis are D&O policies written on?
Claims made
What is the extended reporting period for D&O?
Allows a claim to be received after the polciy has expired- but extensions never nromally exceed 12 months
What is E&O insurance?
Errors and omissions, synonymous with professional indemity,
On what basis is E&O normally written?
Claims made
What is the employer’s liability tracing office?
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
What is employer’s liability called in the US?
‘Worker’s compensation’ and includes medical expenses
What is financial guarantee insurance?
insurance for events like financial failure of companies, change in interest rate, change in property value
What rules have to be followed to write financial guarantee insurance in Lloyds?
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
Why is FG insurance a challenging line to write?
You run the risk of alloqing the isnured to gain, not just protect against loss
/What is malicious product tamper/contamination insurance?
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
What does a typical politucal violence policy cover?
Terrorism, sabotage, riots, malivious damage, revolution, coup, and war
What does politcial violence insurance normally interact with?
Property insurance
What is the main London Market aviation insurance divided into?
Section 1: damage to aircraft, section 2: liability for passengers. section 3: liability for other parties
What do insurers like to do when claims are being made on the physical damage of an aviation policy?
They like to be present when the plane is being dismantled or when repairs are taking place
Do commercial drones need insurance?
Yes! Of 750,000 Special Drawing Rights (just an international currency)
What does passenger liability on airlines cover?
Accidental bodily injury when enetering, on board, or leaving the plane, as well as any damage to their cargo or baggage.
What does third party airline liability insurance normally cover?
Things like a collisoon of two aircrafts, or the ground crew facing injury
What sections does aviation war insurance have?
Section 1 is loss or damage to the aircraft, section 2 is extortion or hijack
What is one of the exclusions of aviation war insurance?
war breaking out between the five permanent members of the UN security council
What is loss of license insurance?
Insurance for a member of aircrew losing their license to fly. It is a benefit policy
What is loss of use insurance?
BI for aircrafts
What does aviation repossesion insurance cover?
The cost of repossessing an aircraft and reconstructing any technical records it had
What is contingent hull, liability, or war insurance?
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.
What area of insurance does space isnurance lie in?
It is not only aviation, it is also marine
When does space insurance normally kick in?
once the rocket intentionally ignites
When vessels are covered for construction, what four areas are covered?
Physical loss or damage, collision liabilities, war, strikes, terrorism, and political acts
What percentage of collision liability does standard hull policy cover?
Only 75%. The other 25% has to be bought from somewhere else
What is general average in maritime law?
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
What is salvage in marine insurance?
The reward you pay someone for rescuing you
What is cargo?
Anything that can be carried by any form of transportation, not just by sea
Which coverage tends to be more exapnsive- cargo policies or hull insurance?
Hull insurance
What does exploration off-shore energy insurance usually cover?
Covers the physical damage on rigs hired for exploration, the first phase of generating energy
What are three main risks considered for oil and gas, covered in exploration policy?
A blowout where oil or gas comes to the surface, the cost of redrilling the well, and any seepage or contamination from this
What are common extensions to the coverage of wells?
Making the well safe, underground control of teh well, removal of teh wreck, care, custody and control of equipment
What is construction insurance for offshore energy?
Construction of a permanent rig
What two sections does a construction all risks (offshore energy) policy have?
Section 1is for physical damage, Section 2 is for liability
What is operational offshore policy?
For the operations of a rig
Unusually, what does shipowners liability insurance cover?
The employees of a ship- crew
How is motor insurance reported in Lloyds?
EU/EEA insurance, USA and Canada insurance, and rest of the world
How is most motor insurance written in Lloyds?
Through delegated authorities, who have better local knowedge
Define ‘portfolio management’
“making chhoices in terms of the business written, which makes sure that the long-term finanical objectives of the investors are met”
What does Lloyds require managing agents to do regarding ESG?
Managing agents must have a responsible investment strategy which clearly uses non-financial risk factors in investment decisions
