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LM1 > Chapter 5 - Structure of the London market > Flashcards

Chapter 5 - Structure of the London market Flashcards

1
Q

What is a limited liability company?

A

This company is owned by the shareholders

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2
Q

What is the difference between a mutual company and a mutual indemnity company?

A

A mutual company is owned by the policyholders and mutual indemnity association while still owned by policyholders have their origins in being a self-managed pool.

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3
Q

Where are mutual indemnity associations usually found?

A

In marine insurance where protection and indemnity clubs insure certain aspects of marine hull liability

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4
Q

What is a captive insurance company?

A

Insurance owned by a large non-insurance company that insures the risks of its parent company only and not others.

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5
Q

What are the 3 different groups at Lloyd’s?

A

Syndicates
Managing agents
Members agents

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6
Q

What is a syndicate?

A

A group of private individuals (names) or corporate members who provide financial backing for risks in Lloyd’s..

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7
Q

What is a managing agent?

A

A managing agent is employed by Lloyd’s syndicates to employ underwriters who accept risks on behalf of the syndicate.

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8
Q

What is a member agent?

A

Members agents advise clients on the advantages and disadvantages of investing in the Lloyd’s market, syndicate selection and performance, reserve requirements and compliance issues.

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9
Q

Who are the managing agents in Lloyd’s regulated by?

A

They are dual regulated by Lloyd’s itself but also by the PRA and FCA

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10
Q

What is the document used to place business called at Lloyd’s?

A

A ‘Slip’ (Market Reform Contract)

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11
Q

What is the process called of and underwriter signing a slip?

A

‘Scratching the slip’

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12
Q

Which organisation checks and issues Lloyd’s policies and collects premium on behalf of syndicates?

A

‘Xchanging’

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13
Q

What is the percentage of the premium called that a broker receives for his services?

A

Commission also known as a ‘Brokerage’

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14
Q

What restriction was removed by the Legislative reform (Lloyd’s) Order 2008?

A

The restriction allowing only Lloyd’s brokers to place business at Lloyd’s.

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15
Q

What is contract certainty?

A

The complete and final agreement of terms (including signed down lines) between the insured and the insurer before inception.

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16
Q

What does it refer to when a broker places more than 100% of a slip and proportionally reducing Lloyd’s syndicates or the insurers share?

A

Signing down the line.

17
Q

Who are Lloyd’s insurance brokers? and who are the regulated by?

A

These are brokers that have proved their knowledge and expertise to the council of Lloyd’s they are regulated by Lloyd’s and the FCA.

18
Q

What is delegated authority?

A

Where an insurer gives a intermediary the authorization act on their behalf may be full underwriting authority or only to issue cover notes and make changes to current policies on the insurers’ behalf.

19
Q

Who are the ABI?

A

Association of British Insurers represent the interests of UK insurance companies

20
Q

Who are the IUA?

A

International Underwriting Association of London - the largest representation organisation for international and wholesale insurance and reinsurance companies.

21
Q

Who are BIBA?

A

British Insurance Brokers Association - trade association for independent insurance intermediaries - brokers promoting members views and encouraging the provision of training

22
Q

Who are LMRC?

A

London market regional commitee a regional committee of BIBA which works with other London market bodies

23
Q

Who are LIIBA?

A

London International Insurance Brokers Association independent trade association representing the interests of London market brokers

24
Q

Who are LMA?

A

Lloyd’s Market Association represents and provides technical information on behalf of Lloyd’s managing agents

25
Q

Who provides the capital to Lloyd’s syndicates?

A

Members (individual or corporate)

26
Q

Where Lloyd’s syndicate reinsures its outstanding liabilities to the syndicate’s next year of account - what is it called?

A

Reinsurance to close

27
Q

Where Lloyd’s syndicate reinsures its outstanding liabilities to the syndicate’s next year of account - what is it called?

A

Reinsurance to close

28
Q

Which organisations underwrite risk on behalf of capital providers including Lloyd’s syndicates

A

Managing general agents (MGAs)

29
Q

Who are the MGAA

A

Managing General Agents Association represent the interests of MGAs

30
Q

Identify 5 reasons why London is a leading insurance and reinsurance market:

A

Capacity
Entrepreneurial spirit
Claims service
Knowledgeable personnel
History and experience

31
Q

If the premium is 25,000 and brokerage is 25% how much will underbites receive

A

£3,750 (£5,000 - 25%)

LM1 (9 decks)

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