Chapter 3 - Main classes of business written in the London Market Flashcards
What are ‘honour policies’?
Policies not enforceable by law because insurable interest isn’t always clear aka PPI - policy proof of interest
What is first party or short-tail insurance?
Physical loss or damage e.g., Hull / Vessel
What is tail?
Time lag between insurance incepting and the final closure of claims under the insurance
What is the term used in Marine for physical damage to the insured property?
Particular Average
What does maritime law state if two vessels collide?
Both have to pay damages to the other
What is builders risk insurance?
Construction of a vessel
Physical damage and liability cover
Purchaser or owner
Length of time and building process value increases
What is loss of earnings insurance (pecuniary)?
If a shipowner cannot use a ship for income
Usually because of physical damage
aka BUSINESS INTERRUPTION
Waiting periods - wait a period of days before claiming
Policy limit - valid for x amount of days
What is cargo/goods in transit insurance?
Physical damage to the goods whilst on their journey
No liabilities
What is stock throughput insurance?
Removes gaps in coverage between static and goods in transit
What is jeweller’s block insurance?
Non-marine but Cargo
Jewellery manufacturing, trade shows, exhibitions, retail
Physical loss or damage
Disappearance excluded
Package policy
What is specie insurance?
Non-marine but Cargo
Physical loss/damage to loose gemstones, metals (gold, silver etc), valuable documents
What is fine art insurance?
Physical loss/damage to ‘installations’ - paintings, sculptures, sound, light
Depreciation of value
Museums, private collectors
Transit or static
What is satellite pre-launch?
Physical loss or damage until the launch insurer takes over
Aggregation - insured items in one place where they are exposed to the same perils
What is cash in transit?
Non-marine but Cargo
Movement of money between locations
Risk prevention criteria
What is goods in transit?
Liability of the carrier
Loss/damage to goods and releasing cargo at the wrong destination/party
aka third party liability claims
What is war and strikes insurance? Including terrorism
Damage caused by abandoned mines or ancient weapons
Strikes and damage caused by terrorists or those acting from a political or religious motive
What is marine liability insurance?
‘Land’ based
Long-tail insurance
Injuring someone else or their property
Port authorities, shipbuilders repairs, marine owners
What is political risks (PRI)?
Investors, businesses to mitigate/manage risk arising from governmental actions
What is offshore energy insurance?
Upstream
Location and extraction of oil and gas from the sea bed
What are the three phases of offshore energy?
Exploration
Construction
Operational
What is onshore energy insurance?
Downstream - processing/refining elements
Midstream - pipelines - non-renewable
What is property insurance?
Physical damage to buildings e.g., office, industrial
Covers machinery, fixtures and fittings
Raw materials before go into manufacturing process before shipment
Reinstatement of buildings when claiming
What is stock insurance?
Damage at insured’s premises
What is theft insurance?
Forcible entry only
What is glass insurance?
Also includes boarding up
What is pecuniary insurance?
Cover monetary loss from internal or external perils
What is money insurance?
Money and valuable documents e.g., tickets and vouchers
What is fidelity guarantee insurance?
Fraudulent acts committed during the policy period
Discovery period - notified of a claim sometime after the event
What is construction insurance?
Contractors/sub-contractors under one policy to prevent gaps
Maintenance period (period immediately after handover) - usually 12 months - ‘snagging’
What is contractors all risks (CAR)?
Physical damage and liability cover
Main contractor on behalf of sub-contractor
What is erection all risks (EAR)?
Contractor responsible for putting up/installing machinery or steel structures
What is cyber insurance?
Online systems and information
E&O/PI/D&O - product fails
Network security failures - BI, damage, data stolen
Privacy breaches - customer data is stolen
What is business interruption (BI) insurance?
Physical loss to property which triggers shut down and loss of earnings
What is contingent BI?
Damage to external party that causes shut down, not damage to own property
What is advanced loss of profits (ALOP) and delay in start up (DSU)?
Costs of working overtime
Covers penalty clauses in contracts if build overruns in time or finances
What is non-marine liability? And what is it also known as?
Aka Casualty
Employers liability
Compulsory in the UK
If an employee becomes injured during their employment
What is public liability?
Members of the public visiting their premises, or employee to member of the public
e.g., shops, restaurants, riding schools
What is professional liability?
Claim being made against a lawyers/doctor etc for incorrect advice or negligent activity
What is motor liability?
Third party for loss or damage to them or their property
What is general liability?
Purchased in addition to physical damage or construction
What is products liability?
Product causing physical damage to something or injury to someone
Any party in the manufacture, sales, supply, distribution chain
What is bloodstock insurance?
Horses, racehorses, show jumpers
What is livestock insurance?
Cattle, sheep etc
Death or illness of the animal including fertility
What is contingency insurance?
Event cancellation
Weather related
Prize indemnity
Death and disgrace - advertising campaigns of ‘bad’ press celebs
Over-redemption - offers and promotions going too far (costly)
What is personal accident, personal illness/sickness?
Not a policy of indemnity
Schedule of benefits are paid
What is death in service?
Payment 2-4x salary
What is kidnap and ransom?
Demanding payment for release
Medical expenses once released
Family during the incident
What is malicious tamper, extortion, product recall?
Removing and replacing stock
Brand loyalty
Covers leaking info
What is intellectual property?
Protects work or inventions
Trademarking
Legal cost of defending IP
What is aviation insruance?
Does not include wear and tear
Physical damage of aircraft and location
Private pleasure fixed wing aircraft
Commercial fixed wing - taking off, landing, flying
Rotary aircraft (helicopters). gliders, microflights (hang gliders), hot air balloons, drones
What is aviation liabilities?
Passengers - whilst boarding, on, disembarking the plane
Third party - baggage handlers
Product related - illness from food, contaminated fuel, repairs
What is loss of licence in aviation?
Failed medical so loss of licence to pilot
Provides replacement personal income
What is airport operators insurance?
Premise liability - duty free
Products - fuel for aircrafts
Hanger-keepers liability - maintenance/storage for clients
What are the different ways to buy reinsurance?
Single risk
Certain classes
Insurer’s whole portfolio
CAT losses
Should inwards premium be greater than and equal to the sum of claims, reinsurance and operating costs to be profitable?
Yes
What are the benefits of purchasing reinsurance?
Increase capacity - limits of RI, direct risks, greater share = placing/claims process is quicker
Smoothing peaks and troughs - spreads the cost of large losses over a period of time, allows insurers to diversify into new COBs, protects the portfolio
Benefits of writing/selling reinsurance?
Access other geographical areas
Access other COBs
What are three types of reinsurer?
Companies that do not write direct
Syndicates
Insurers who do insurance and reinsurance
What is a retrocedant?
Reinsurer purchasing reinsurance for themselves
Who buys reinsurance?
Insurers
Reinsurers
Captive insurers - takes risks only from its parent company or group
Mutual insurers - group together and form a pool (e.g., P&I)
What does cession mean?
Share of risk passed to UWs
