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Chapter 3 - Main classes of business in the London Market > Chapter 5 - Structure of the London Market > Flashcards

Chapter 5 - Structure of the London Market Flashcards

1
Q

What is Lloyd’s?

A

A marketplace made up by a Society of Members

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2
Q

What is the role of the Corporation of Lloyd’s?

A

Providing the infrastructure for the marketplace, together with the responsibility for international liaison

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3
Q

What is the Council of Lloyd’s?
When was it created?
Who is it made up by?
What is its authority?

A

The Council of Lloyd’s is responsible for the management and liaison of the market

It was created in 1982 under the Lloyd’s Act

It is made up by 18 members.

It can make decisions and issue resolutions, requirements, rules and byelaws. It can also discharge some functions to other bodies and/or committees in Lloyd’s.

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4
Q

Describe the different members in the council

Who are they regulated by

A

6 working members - share capital provider in Lloyds. either actively working in the market or just retired. managing agents/brokers.
6 external members - a share capital provider but otherwise outside the other scope of above
6 nominated members - outside of Lloyd’s, like non exec directors

They must be regulated by the FCA

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5
Q

What are byelaws? Who makes them?

A

Market laws which organisations within the market must comply with. They can only be made by the Council

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6
Q

Describe Lloyd’s regulation

A

Managed by the FCA & PRA.
Lloyd’s brokers and member’s agents are only regulated by the FCA

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7
Q

Who are brokers regulated by?

A

FCA

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8
Q

What is the role of the Lloyd’s Franchise Board

A

Sets market strategy and responsible for risk management and profitability targets across the market. Provides guidelines to managing agents and business planning in order to improve profitability and build financial strength of the market.

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9
Q

Who delegates responsibility to the Franchise Board?

A

The Council

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10
Q

What are Syndicates?

A

Syndicates are groups of private individuals/corporate investors who carry the risks. These investors are known as members/Names

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11
Q

Who is a Lloyds member?

A

Investors into the syndicates who take the risk (individual or corporate)

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12
Q

Who is a Lloyd’s Name?

A

Investors into the syndicates who take the risk (individual or corporate)

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13
Q

How are syndicates recognized in law?

A

They are not recognised as a separate legal entity. They are merely a sum of their members

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14
Q

How are limited liability companies regonised in law?

A

They are a company that exists separate from its shareholders

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15
Q

How long does a Syndicate exist for?

A

1 year, known as an Annual Venture

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16
Q

What is a managing agent?

A

Employed by the syndicate to appoint underwriters to write business on behalf of the syndicate

17
Q

Who are managing syndicates regulated by?

A

The FCA (financial conduct) and the PRA (for prudential requirements)

18
Q

What does capital mean?

A

Capital is the money that members/names put into the market via syndicates

19
Q

What is the lifecycle of risk under a syndicate?

A

3 years

1 year - accepting risk
24 months - keep the book open to let premium come in/claims to be notified
after 3 years it works out its profit/loss

20
Q

What is a member agent?

A

A member agent advises names/members on the disadvantages/advantages of investing in the market. Whether they should invest in one or more syndicate, etc.

They are communication channels between the managing agents and the investors.

21
Q

What does the FCA regulate insurance companies for?

A

companies in London for conduct of business issues.

22
Q

What does the PRA regulate insurance companies for?

A

regulates london based insurance companies on prudential requirements (ie solvency / levels of capital)

23
Q

What are EU insurance companies regulated by?

A

Their own home regulator

24
Q

What is the trade body for the company markets called?

A

The International Underwriting Association of London - has no regulatory power

25
Q

What are the different formats, outside of Lloyds, that insurance companies may take?

A
  1. Limited liability companies
  2. Mutual indemnity companies (owned by like-minded customers, having a managing agent to run the business)
  3. Mutual companies (owned by policyholders, usually working in same sectors etc). Profits are retained or paid back to shareholders in dividends
  4. Captive insurers
26
Q

How do limited liability and mutual companies raise capacity?

A

Through shareholder capital.

27
Q

How does a mutual company raise capital?

A

Charging premium based on size of risk bought to pool

28
Q

Who regulates a broker?

A

FCA

29
Q

What’s the role of the LMA?

A

Representation, information and technical advice to the underwriting business. It identifies and resolves issues in the underwriting market, working with the Corporation of Lloyds. All managing agents and members are part of the LMA

30
Q

What’s the role of the International Underwriting Association (IUA)?

A

Representing insurance and reinsurance companies (not Lloyds). It is a rep body ie it has no control over its member organisations.

Its priorities are:
- process efficiency and business attraction to london
- promote expertise and innovation in underwriting and claims
- influence public policy and compliance

31
Q

What is the role of the Association of British Insurers (ABI)?

A

Voice of the UK insurance, investment and long term savings industry.

Role is to
- Inform public policy debates, policymakers
- Encourage customers to understand the products
- Promote a competitive industry

32
Q

What’s the role of British Insurance Brokers Association?

A

Major trade association for brokers. Aim to promote the highest standards of business practice of brokers to protect and enhance insurance brokers/members

33
Q

What’s the role of the London Market Regional Committee (LMRC)?

A

used to represent purely Lloyds brokers operating worldwide. Now merged into BIBA

34
Q

What’s the role of the London and International Insurance Brokers’ Association? (LIIBA)

A

Independent trade body representing brokers operating in London and international markets. Priorities are:

  • Representing to government
  • Modernising business processes
  • Supporting members with legislative/technical changes
35
Q

What’s the role of the Managing General Agents Association?

A

For MGAs only.

36
Q

4 reasons why London is the leading world insurance market?

A

Capacity
Entrepreneurial spirit
Good claims service and knowledgeable personnel
History and experience

37
Q

What is contract certainty? How do we ensure this in Lloyds?

A

The concept that both parties are fully aware of the coverage and T&Cs of the policy prior to inception. In Lloyd’s we have a MRC (slip)

38
Q

What is XIS?

A

The central Market database

39
Q

In a contract, which Parties agree a claim?

A

Those listed as agreement parties.

Chapter 3 - Main classes of business in the London Market (7 decks)

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