Chapter 2: The Insurance Market Flashcards
Name the five types of insurer.
- Proprietary companies
- Mutual companies
- Captive companies
- Protected cell companies
- Lloyd’s
What is a proprietary insurer?
Conventional insurers owned by shares. E.g. limited or PLC companies.
What is a mutual insurer?
Owned by the policyholders. Share profits by way of lower premiums.
What is a mutual indemnity association?
A self-managed pool of insurers owned by the policyholders. Common in marine insurance.
What is a captive insurer?
Created by the parent company to provide insurance solely to that parent.
What is a protected cell company?
A special type of captive insurer where the assets of the ‘celled’ companies are ringfenced and thus treated as separate insurance entities.
What is a Takaful insurance company?
Specialist policies designed to circumvent the anti-gambling beliefs of Islamism.
What is a composite insurer?
One which offers numerous classes of business.
What is a specialist insurer?
One which offers a particular type of business.
Name the 4 actors within the Lloyd’s market.
- Syndicates
- Managing agents
- Names
- Member’s agents
What is the role of a Lloyd’s syndicate?
The groups of individual or corporate members who carry the risks. Sometimes also referred to as ‘Names’.
What does a Lloyd’s managing agent do?
Handles the administrative work on behalf of syndicates. The employ the underwriters and claims adjusters.
What liability do Lloyd’s names have?
Limited liability. Names with unlimited liability are no longer permitted to join Lloyd’s.
What does a member’s agent do at Lloyd’s?
They advise syndicates (names) on the pros and cons of investing in the Lloyd’s market. They also act as a comms channel between the investors and the managing agents who conduct business on their behalf.
How is business placed at Lloyd’s?
Details of the risk are stated on the Market Reform Contract (slip). They will then go to the underwriters for quotes. The first will indicate their share then the Broker tries to fill the rest by asking other underwriters.
What is an intermediary?
An agent who brings together two parties to form a legally binding relationship.
Define agent.
A person who acts on behalf of a principle to bring them into a legal relationship with another.
When is an intermediary FCA exempt?
If they are:
- An appointed representative (AR), or
- An introducer appointed representative (IAR).
What is an Authorised Person?
A firm regulated by the FCA.
Define ‘Appointed Representative’.
Someone appointed by a regulated principle to bring third parties into legal relationships with that principle. E.g. AMEX offering insurance on behalf of Chubb.
The principle is responsible for overseeing ARs.
What is an Introducer Appointed Representative?
Responsible for promoting the services of the principle but not subject to the same level of regulation as ARs.
Popular as a marketing channel for the Principle.
How does direct and indirect marketing differ in terms of insurance?
Direct - the Insurer or its employees will sell their product to those who may buy it.
Indirect - intermediaries are paid by the insurer to promote products.
What is a binder?
A delegated authority scheme which allows an insurer to issue cover on behalf of another company which provides insurance capacity. I.e. an MGA.
What is Bancassurance?
An arrangement wherein an insurer’s products are sold to a bank’s customers.
