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LM1 > Chapter 3: Main Classes of Business > Flashcards

Chapter 3: Main Classes of Business Flashcards

1
Q

Marine Insurance Insurable interest (honour policy)

A

Purchasers insurable interest is not clear (uncertainty about true value)
- known as honour policy

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2
Q

Policy Proof of Interest (PPI)

A

Used to identify honour policies

Mere possession of an insurance contract is proof of insurable interest

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3
Q

Hull and Yacht Insurance

A
  • sailing vessels
  • motor vessels
  • inland vessels
  • physical loss or damage type insurance (first party)
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4
Q

Commercial vessels insurance

A

Cargo vessel
Cruise/passenger vessels
specialist vessels

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5
Q

Builders risk insurance (marine)

A
  • covers construction of a vessel
  • provides combined physical damage and liability cover
  • Either purchaser, owner of buildyard or both
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6
Q

Loss of Earnings insurance

A
  • If ship cannot be used (no money made)
  • Unable to hire out to carry cargo/passengers
  • Dont have deductible/excess but waiting period instead
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7
Q

Cargo Insurance

A

Physical damage insurance for items moved about on their journey
- does not cover liability

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8
Q

Goods in transit

A
  • Primarily liability for person/org transporting items
  • Covers some damage to own property but mainly liability for damage to cargo in their care
  • Does not cover sea carriers
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9
Q

Stock Throughput insurance

A
  • transit plus storage policy
    end to end
  • reduces gap in cover
  • generally marine
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10
Q

Jewellers block

A

package policy covering property and liability

physical loss/damage policy

doesnt usually cover mysterious disappearance

Covers manufacturing, through trade shows, retail risks and exhibitions

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11
Q

Specie

A

Physical loss insurance covering

Gems, metals and documents

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12
Q

Fine art

A

paintings
Sculptures
Installations
Physical damage/loss
Covers the cost of repairing an item and paying out any depreciation due to damage

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13
Q

Satellite pre-launch insurance

A
  • covers satellites moving from manufacturing facility to launch pad
  • covers physical loss/damage until launch
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14
Q

Cash in transit

A

Covers movement of money

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15
Q

War and strikes insurance

A
  • Includes terrorism in the main wording
  • Excluded from main hull, cargo, marine liab policies
  • covers war and civil war type risks
  • captures and seizures
  • damage by abandoned mines or ancient weapons
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16
Q

Strike insurance

A
  • covers both strikes and damage caused by terrorists or those under political/religious motives
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17
Q

Marine liability

A

Legal coverage for injuring someone or their property

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18
Q

what does Vessel marine liability cover

A
  • injury or death to crew/visitors
  • Pollution caused by escape of cargo/waste
  • Damage to cargo being carried
  • Damage to external properties (docks/lighthouses)
  • removing the wreck
  • Damage caused if the vehicle is hired
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19
Q

Parties who should consider ML insurance

A

Port authorities
Shipbuilders /repairers
Marina owners

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20
Q

Political Risks Insurance

A
  • Unpredictable political perils which can impact investments
  • Enable the management of risks arising from the (in)action of hostile/unconstitutional governments
  • CEND
  • CCP
  • Contract frustration risks
    Exchange transfer
    Non-houring lets of credit.
    Wrong calling of bonds
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21
Q

CEND

A
  • Confiscation
  • Expropriation
  • Nationalisation
  • Deprivation

Type of PR coverage

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22
Q

CCP

A
  • Central Counterparty
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23
Q

Benefit to exporters

A
  • Offers alternative to Export Credit Schemes
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24
Q

Offshore energy insurance

A
  • Upstream insurance
  • Exploration for oil and gas (liability of people and property)
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25
Q

Offshore energy construction

A
  • Construction (permanent rig construction)
  • Covers whole period
  • Multiple locations
  • Bringing on-site parties together
  • Physical and liability risks
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26
Q

Operational offshore energy

A
  • Business as usual
  • Physical, liability AND war and terrorism
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27
Q

What 3 aspects does Non-Marine property cover

A
  • Physical damage to buildiings
  • Can also cover machinery/fixtures/fittings inside building
  • Raw materials before being used in manufacturing
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28
Q

Property stock insurance

A

Physical damage covering stock at premises

requires regular declarations of stock level to avoid underinsurance

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29
Q

Property Theft insurance

A

Forcible entry to property coverave

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30
Q

Glass insurance

A

Covers specific glass elements of a building

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31
Q

Pecuniary insurance

A
  • Monetary over physical loss
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32
Q

Money insurance

A
  • Risk of money and other value documents (e.g. tickets)
  • Not applicable if considered an inside job
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33
Q

Fidelity Guarantee Insurance

A
  • Covers fraudulent acts committed during the policy
34
Q

Construction Insurance

A

Split Contract All Risks and Erection All Risks

Physical damage and liability cover

35
Q

Contract all risks

A

Purchased by main contractor on or behalf of sub-contractors

36
Q

Erection all risks

A

Purchased by contractor responsible for erecting/installing machinery/structure

37
Q

Onshore energy

A
  • Covers oil, gas, mining and power generation (including nuclear) as well as renewable energy
  • similar to property/construction
38
Q

Business Interruption insurance

A
  • replaces lost income after waiting period
  • requires physical loss/damage to insured property which caused shutdown
39
Q

Contingency insurance

A
  • Covers when a shutdown is caused by an external event but there must be evidence of a link but not damage to the property (e.g. COVID and euro 2020)
40
Q

Advanced loss of profits (ALOP)

A

Cost of working over time (increased cost of working)

Both marine and non-marine

41
Q

Project Cargo insurance

A
  • large power plant projects
  • non-arrival can cause considerable delays
  • addition to standard cargo
  • Similar approach with CAR/EAR
42
Q

Delay in start up insurance

A
  • Covers loss of profits and debt servicing cost provisions
43
Q

Types of non-marine casualty insurance

A
  • Employers liability
  • Public Liability
  • Product Liability
  • General Liability
  • Professional liability
44
Q

Employers liability

A

Compulsory

In the US known as Workers Compensation (also compulsory)

45
Q

Public Liability

A
  • Covers loss/damage to members of public visiting premises
  • Covers loss/damage caused by employee to client/member of public
46
Q

Professional Liability

A
  • Covers doctors/financial professionals against claims made for negligence/incorrect advice
47
Q

What does General liability work in addition too

A
  • Freestanding policy or in addition to physical/construction policies
48
Q

Products liability

A
  • Covers product causing damage to someone/injury
  • Available in any part of the supply chain (sales/manufacturing)
49
Q

Bloodstock insurance

A

Horses (competitive)

mainly covers illness/death

Can extend coverage to cover infertility

50
Q

Livestock insurance

A

Covers cows, pigs, sheep, alpacas etc.

51
Q

Examples of Contingency Insurance coverage

A
  • Event cancellation
  • Weather related
  • Prize indemnity
  • Death and disgrace
  • Overredemption
52
Q

Personal Accident insurance

A
  • Not a policy of indemnity (benefit policies) as you are not able to price loss of a limb
  • Instead follows a schedule of benefits that are paid out once the policy is triggered
  • Lump sum payable on death
53
Q

Kidnap and ransom

A
  • Covers capture of an individual
  • Demanding payment for release
  • Covers medical expenses of the captured individual
  • Provision of specialist negotiation team
54
Q

Malicious product Tamper / Extortion / Product recall

A
  • safety issues with a product
  • warnings have to be sent out
  • stock has to be removed
55
Q

Intellectual property insurance

A
  • covers legal cost of defending an action against your IP
  • Also covers if you are alleged to have infringed
56
Q

Aviation Physical Damage insurance

A
  • covers all manner of aircraft
  • does not cover wear and tear
57
Q

Aviation liability insurance

A

Covers
- Passengers
- Third parties other than passengers
- Product-related

  • EL for crew would be covered in a regular EL policy
58
Q

Loss of license/use insurance

A
  • provides replacement revenue stream in the event of loss after set waiting days
  • Deals with individuals who have failed medicals
59
Q

Airport operators policies

A
  • Premises
  • Hangars
  • Products
60
Q

Airport premises liability

A

e.g. someone falling over in a shop

61
Q

Airport product liability

A

if the airport provides fuel to aircraft

62
Q

Airport hangar-keepers liability

A

Provides maintenance/storage for clients

63
Q

Reinsurance

A

Entity buying the policy is already insuring the risk

Uses risk transfer to transfer risk to third part

64
Q

Types of Reinsurer

A
  • Organisations that are also insurers
  • Specialised organisations that mainly write RI
    Lloyd’s syndicates
  • Accept risks from insurer or RI broker
  • Cover captive insurers, other reinsurers and insurance companies
65
Q

Different classes of reinsurance coverage

A
  • Single unusual risk
  • Certain class of business
  • An insurer’s whole portfolio
  • Catastrophic loss
66
Q

Purpose of reinsurance

A

Not compulsory but good business practice

Must consider reinsurance cost when agreeing premium

Does not remove claims responsibility

If the reinsurer becomes insolvent the risk is not on the insured

67
Q

Benefits of reinsurance

A

Increased capacity

Smoothing peaks and troughs

Diversification of a portfolio

Protecting a portfolio

Access to other geographical areas

Access to other CoB

68
Q

Facultative Reinsurance

A
  • Covers a single known risk
  • usually done because it would not fit any other established RI
  • Will only respond to claims on that risk
69
Q

Treaty reinsurance

A
  • Coverage of a wider portfolio of risks (either CoB or whole book of business)
70
Q

Main RI markets

A

UK, US, Bermuda and Europe

71
Q

Captive insurer

A
  • Part of a larger insurance organisation
  • Only takes risks from parent company
  • Ring-fence funds to deal with claims
  • May purchase RI to protect financial position
72
Q

Mutuals

A
  • Like minded organisations grouping together to form an insurance pool
73
Q

to Cede

A

Act of sharing risk with reinsurers

74
Q

Cedant

A

Original insurer transferring risk to reinsurer

75
Q

Cession

A

Share of the risk being passed to the Reinsurer

76
Q

Collecting note

A

Document used to present the claim to reinsurer under an XoL contract

77
Q

Non-proportional reinsurance

A
  • Premium and claims have no direct correlation

Premium settles inline with direct insurance

Claims dealt with on a financial rather than shared basis and paid out in excess of pre-agreed amount

78
Q

Proportional reinsurance

A

Premium and Claims shared between insurer and reinsurer in pre-agreed percentage (e.g. 30%)

79
Q

Quota share / Surplus treaty reinsurance

A

Cases where there are limits in financial terms for size of risks

80
Q

Retrocedant

A

Reinsurer obtaining reinsurance

81
Q

Retrocession

A

Cession where the entity ceding is already a reinsurer

82
Q

Retrocessionaire

A

Reinsurer accepting reinsurance from a reinsurer

LM1 (9 decks)

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