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
2
Q
Policy Proof of Interest (PPI)
A
Used to identify honour policies
Mere possession of an insurance contract is proof of insurable interest
3
Q
Hull and Yacht Insurance
A
- sailing vessels
- motor vessels
- inland vessels
- physical loss or damage type insurance (first party)
4
Q
Commercial vessels insurance
A
Cargo vessel
Cruise/passenger vessels
specialist vessels
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
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
7
Q
Cargo Insurance
A
Physical damage insurance for items moved about on their journey
- does not cover liability
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
9
Q
Stock Throughput insurance
A
- transit plus storage policy
end to end - reduces gap in cover
- generally marine
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
11
Q
Specie
A
Physical loss insurance covering
Gems, metals and documents
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
13
Q
Satellite pre-launch insurance
A
- covers satellites moving from manufacturing facility to launch pad
- covers physical loss/damage until launch
14
Q
Cash in transit
A
Covers movement of money
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
16
Q
Strike insurance
A
- covers both strikes and damage caused by terrorists or those under political/religious motives
17
Q
Marine liability
A
Legal coverage for injuring someone or their property
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
19
Q
Parties who should consider ML insurance
A
Port authorities
Shipbuilders /repairers
Marina owners
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
21
Q
CEND
A
- Confiscation
- Expropriation
- Nationalisation
- Deprivation
Type of PR coverage
22
Q
CCP
A
- Central Counterparty
23
Q
Benefit to exporters
A
- Offers alternative to Export Credit Schemes
24
Q
Offshore energy insurance
A
- Upstream insurance
- Exploration for oil and gas (liability of people and property)
25
Offshore energy construction
- Construction (permanent rig construction)
- Covers whole period
- Multiple locations
- Bringing on-site parties together
- Physical and liability risks
26
Operational offshore energy
- Business as usual
- Physical, liability AND war and terrorism
27
What 3 aspects does Non-Marine property cover
- Physical damage to buildiings
- Can also cover machinery/fixtures/fittings inside building
- Raw materials before being used in manufacturing
28
Property stock insurance
Physical damage covering stock at premises
requires regular declarations of stock level to avoid underinsurance
29
Property Theft insurance
Forcible entry to property coverave
30
Glass insurance
Covers specific glass elements of a building
31
Pecuniary insurance
- Monetary over physical loss
32
Money insurance
- Risk of money and other value documents (e.g. tickets)
- Not applicable if considered an inside job
33
Fidelity Guarantee Insurance
- Covers fraudulent acts committed during the policy
34
Construction Insurance
Split Contract All Risks and Erection All Risks
Physical damage and liability cover
35
Contract all risks
Purchased by main contractor on or behalf of sub-contractors
36
Erection all risks
Purchased by contractor responsible for erecting/installing machinery/structure
37
Onshore energy
- Covers oil, gas, mining and power generation (including nuclear) as well as renewable energy
- similar to property/construction
38
Business Interruption insurance
- replaces lost income after waiting period
- requires physical loss/damage to insured property which caused shutdown
39
Contingency insurance
- 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
Advanced loss of profits (ALOP)
Cost of working over time (increased cost of working)
Both marine and non-marine
41
Project Cargo insurance
- large power plant projects
- non-arrival can cause considerable delays
- addition to standard cargo
- Similar approach with CAR/EAR
42
Delay in start up insurance
- Covers loss of profits and debt servicing cost provisions
43
Types of non-marine casualty insurance
- Employers liability
- Public Liability
- Product Liability
- General Liability
- Professional liability
44
Employers liability
Compulsory
In the US known as Workers Compensation (also compulsory)
45
Public Liability
- Covers loss/damage to members of public visiting premises
- Covers loss/damage caused by employee to client/member of public
46
Professional Liability
- Covers doctors/financial professionals against claims made for negligence/incorrect advice
47
What does General liability work in addition too
- Freestanding policy or in addition to physical/construction policies
48
Products liability
- Covers product causing damage to someone/injury
- Available in any part of the supply chain (sales/manufacturing)
49
Bloodstock insurance
Horses (competitive)
mainly covers illness/death
Can extend coverage to cover infertility
50
Livestock insurance
Covers cows, pigs, sheep, alpacas etc.
51
Examples of Contingency Insurance coverage
- Event cancellation
- Weather related
- Prize indemnity
- Death and disgrace
- Overredemption
52
Personal Accident insurance
- 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
Kidnap and ransom
- Covers capture of an individual
- Demanding payment for release
- Covers medical expenses of the captured individual
- Provision of specialist negotiation team
54
Malicious product Tamper / Extortion / Product recall
- safety issues with a product
- warnings have to be sent out
- stock has to be removed
55
Intellectual property insurance
- covers legal cost of defending an action against your IP
- Also covers if you are alleged to have infringed
56
Aviation Physical Damage insurance
- covers all manner of aircraft
- does not cover wear and tear
57
Aviation liability insurance
Covers
- Passengers
- Third parties other than passengers
- Product-related
- EL for crew would be covered in a regular EL policy
58
Loss of license/use insurance
- provides replacement revenue stream in the event of loss after set waiting days
- Deals with individuals who have failed medicals
59
Airport operators policies
- Premises
- Hangars
- Products
60
Airport premises liability
e.g. someone falling over in a shop
61
Airport product liability
if the airport provides fuel to aircraft
62
Airport hangar-keepers liability
Provides maintenance/storage for clients
63
Reinsurance
Entity buying the policy is already insuring the risk
Uses risk transfer to transfer risk to third part
64
Types of Reinsurer
- 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
Different classes of reinsurance coverage
- Single unusual risk
- Certain class of business
- An insurer's whole portfolio
- Catastrophic loss
66
Purpose of reinsurance
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
Benefits of reinsurance
Increased capacity
Smoothing peaks and troughs
Diversification of a portfolio
Protecting a portfolio
Access to other geographical areas
Access to other CoB
68
Facultative Reinsurance
- 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
Treaty reinsurance
- Coverage of a wider portfolio of risks (either CoB or whole book of business)
70
Main RI markets
UK, US, Bermuda and Europe
71
Captive insurer
- 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
Mutuals
- Like minded organisations grouping together to form an insurance pool
73
to Cede
Act of sharing risk with reinsurers
74
Cedant
Original insurer transferring risk to reinsurer
75
Cession
Share of the risk being passed to the Reinsurer
76
Collecting note
Document used to present the claim to reinsurer under an XoL contract
77
Non-proportional reinsurance
- 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
Proportional reinsurance
Premium and Claims shared between insurer and reinsurer in pre-agreed percentage (e.g. 30%)
79
Quota share / Surplus treaty reinsurance
Cases where there are limits in financial terms for size of risks
80
Retrocedant
Reinsurer obtaining reinsurance
81
Retrocession
Cession where the entity ceding is already a reinsurer
82
Retrocessionaire
Reinsurer accepting reinsurance from a reinsurer
