Chapter 3 - Main Classes of Business Written in the London Market Flashcards
What are honour policies?
Policy is enough for proof of insurable interest
What is hull and yacht insurance
First party damage / physical loss insurance - each ship has to pay losses to the other according to their part of the blame
Policyholders make claim for their proportion of the blame in addition to any damage suffered by their own vessell
What is builder’s risk insurance?
Damage and liability insurance due to lengthy time to build - takes into account increasing values as building of ship progresses
What is loss of earnings insurance?
Marine version of business interruption, typically requires damage to vessel
What is cargo and goods in transit insurance?
Insurance for the person/organisation moving goods - damage to their own property or liability in case they damage goods in their care
What is cargo insurance?
Covers physical damage to goods whilst on a journey
What is stock throughput insurance?
Combines transit and storage policy for cargo, so covered if layover at a port during transit
What is jeweller’s block insurance?
Package policy covering property and liability from manufacture through trade shows and exhibitions and retail.
Physical damage / loss insurance not including mysterious disappearance due to nature of jewellery
What does specie insurance cover?
Physical loss or damage to:
- loose gemstones
- precious metals
- valuable documents
What is satellite launch insurance?
Essentially cargo moving between manufacturers and launch pad (marine market)
What is cash in transit insurance?
Covers movement of money between locations, underwriters often put risk prevention measures into the policy terms
What is goods in transit insurance?
Covers liability of carriers in respect to good being carried
What is fine art insurance?
Physical loss or damage covering static in museum and in transit
What is war insurance?
Covers war type risks as well as damage caused by abandoned mines etc
Specifically does not cover piracy, piracy covered in hull
What is strike insurance?
Covers damaged caused by terrorists or those acting from political or religious motive
What kind of things should vessel owners and operators insure against?
- injury or death of crew / visitors
- pollution by escape of cargo
- damage to cargo being carried
- damage to others property
- removal of wreck after incident
- damage to vessel if hired from owner
Who else should consider buying marine insurance?-
- port authorities
- shipbuilders / repairers
- marina owners
What is political risks insurance?
Offers means for investors and businesses to mitigate and manage risks arising from actions of or restrictions imposed by hostile or unconstitutional governmental actions
Creates more stable environment for trade
What is offshore energy insurance and what are the key stages of it?
Location and extraction of oil and gas from under the seabed
- exploration phase
- construction phase
- operational phase
What is property insurance?
Physical damage to buildings, can also cover contents - indemnified by reinstatement generally
What is stock insurance in property?
Physical damage to stock at insured’s premises, regular declarations of stock required
What is theft insurance in property?
Covers forcible entry to a property, does not pay out for not forced entry
What is pecuniary insurance?
Covers monetary loss rather than damage
Money insurance covers money and valuable documents which are responsibility of insured
Fidelity guarantee insurance respond to fraudulent acts committed during policy period
What are CAR and EAR policies?
Contractors all risks
Erection all risks
Combined physical damage and liability cover for construction workers
Important note about onshore insurance?
Doesn’t just relate to oil and gas, incorporates mining etc renewable energy sources
What exposures can cyber policies cover?
- BI
- reputation
- ransoms
- physical damage to systems
- d&o
- contingent BI
What do basic BI policies need to respond?
Physical loss or damage to insured property which triggers loss of income
What are advanced loss of profits and delay in start-up insurance?
Loss of profit and debt servicing for having to pay overtime can be insured against in all types of construction projects to protect against significant financial loss for missing deadlines
What are bloodstock and livestock?
bloodstock is horses etc
livestock is cows, sheep etc
Insurance generally about death or illness but can extend to infertility etc
What is contingency insurance?
Covers things like:
- event cancellation
- weather-related instances
- prize indemnity
- death and disgrace
- over-redemption
What insurances can be written under personal accident insurance?
- personal accident (benefit policy for things like sports people who lose income if they get injured)
- personal illness, triggered by accident or injury
- death in service, generally purchased by employers who would have to pay death in service to family
What are the key parts of kidnap and ransom insurance?
- payment of ransom
- provision of negotiation specialist team to assist insured family during incident
- payment of medical expenses for captured person once released
What is product tamper, extortion, and product recall insurance?
Insurance pays for helping to removed potentially affected items, replace stock, and maintain reputation
Also helps pay if demands for money by extortion over incident
What does intellectual property insurance cover primarily?
Covers legal costs of defending an action against your intellectual property
What do insurers need to be wary of about physical damage in aviation policies?
Physical damage affects different aircraft differently, need to know use and area operating as well
Do not respond to wear and tear damage
What liabilities relate to aviation?
- injury to passengers whilst boarding, disembarking or on plane
- third parties like baggage handlers
- product related
- El covered normally, not required to have separate aviation related policy
What is loss of license / use insurance?
- loss of use is aviation version of BI
- loss of license occurs if pilot fails medical etc but has to prove it is not their fault
What liabilities do airport operators face?
- premises liability (PL essentially)
- products (if supplying fuel)
- hangar-keepers, provides maintenance and storage services for clients
What is reinsurance?
Insurance for insurers who want to transfer some of their own risk to other insurers
What are different ways reinsurance can be written?
- single risk
- certain class of business
- insurer’s portfolio
- catastrophe losses
What is the purpose of reinsurance?
Purely business decision but looked upon well by regulators
Need to make sure inequality below satisfied:
inward premium >= claims + reinsurance cost + operating costs
What are the benefits of reinsurance?
- increases capacity by reducing gross direct exposure
- smooths out peaks and troughs
What are the benefits of writing reinsurance?
- access different geographies
- access different classes of business
Who generally sells reinsurance?
- specialist companies that write no direct insurance
- Lloyd’s syndicates
- insurers who also write direct insurance
Who generally buys reinsurance?
- insurers
- reinsurers
- captives
- mutuals
Define to cede
share risk with reinsurers
Define cedant
original insurer passing risk to reinsurers
Define cession
share of risk passed to reinsurers
Define collecting note
Document to present claim to reinsurers
Define facultative reinsurance
reinsurance purchased for single risk
Define non-proportional reinsurance
Premium and claims do not have direct correlation, relates to direct insurance such as excess of loss
Pays out over a certain threshold
Proportional reinsurance
Proportion of premiums and claims split between insurer and reinsurer
Define retrocedant
Reinsurer buying reinsurance for itself
Define retrocession
Entity seeding is a reinsurer
Define retrocessionaire
Reinsurer accepting reinsurance from an entity that is a reinsurer
Define treaty reinsurance
Reinsurance for wide portfolio of risks, such as a companies whole portfolio or class of business
