Chapter 5 - Structure of the London Market

Question 1

What is Lloyd’s of London?

Answer 1

Marketplace

Society of members

Question 2

What does the Corporation of Lloyd’s provide?

Answer 2

The infrastructure for the marketplace and international liaison

Question 3

Under what act was the Council of Lloyd’s created?

Answer 3

Lloyd’s Act 1982

Question 4

What is the Council of Lloyd’s responsible for?

Answer 4

Management and supervision of the market

Question 5

Who are the Society of Lloyds and Lloyds Managing Agents regulated by?

Answer 5

FCA and PRA

Question 6

Who are Lloyd’s brokers and members agents regulated by?

Answer 6

FCA

Question 7

What members do the council of Lloyd’s have?

Answer 7

3 working - working in the market
3 external - provides capital but not a member
9 nominated members - non-exec

All elected by Lloyd’s members

Question 8

How often is the chairman and deputy of the council of lloyds elected?

Answer 8

Annually by the council

Question 9

Are all Lloyd’s members approved by the FCA?

Answer 9

Yes

Question 10

Can the Lloyds Council issue byelaws to managing agents?

Answer 10

Yes

Question 11

What are syndicates?

Answer 11

Groups of private individuals or investors who carry the risk

aka UW members or NAMES

Question 12

How many members were there in 2021?

Answer 12

90

Question 13

What is an ‘annual venture’?

Answer 13

Renews members known by name, number and YOA

Question 14

What is a managing agent?

Answer 14

Entity appoints UWs who may accept risks on behalf of the UW

Question 15

What is capital?

Answer 15

Investment put into the the market by investors (members or NAMES)

Question 16

What is RITC?

Answer 16

Reinsurance to close

Syndicates reinsure outstanding liabilities with its next YOA

i.e., 2020 reinsure into 2021 accounts

Question 17

What is R&R?

Answer 17

Reconstruction and renewal

Question 18

What was created to reconstruct the market in 1992?

Answer 18

EQUITAS

All 1992 and prior risks reinsured into EQUITAS

Question 19

What is syndicate capacity?

Answer 19

How much each can write each year

Question 20

What are members agents?

Answer 20

Advise whether members invest their capital

Question 21

How do private members now enter the market?

Answer 21

Through Limited Liability vehicles

1. UK Limited Company
2. LLP - Limited Liability Partnership

Question 22

What is security of tenure?

Answer 22

Members have automatic right to participate in the following YOA

Question 23

Is security of tenure a tradable asset?

Answer 23

Yes

Question 24

How can a member trade profitable syndicates?

Answer 24

Lloyd’s capacity auctions

Question 25

What is limited tenancy?

Answer 25

Arrangement with managing agent terminates after predefined period / period of notice

Question 26

What is the company market?

Answer 26

Not Lloyd's Any company to transact in the London Market must be authorised in the PRA

Question 27

What does the PRA focus on?

Answer 27

Requirements (solvency / level of capital)

Question 28

What does the FCA focus on?

Answer 28

Conduct of business issues

Question 29

What is the trade body for the company market?

Answer 29

IUA International Underwriting Association of London Has no regulatory power

Question 30

What are the types of insurers in the company market?

Answer 30

Limited liability e.g., Aviva Mutual indemnity association e.g., P&I clubs Mutual companies e.g., owned by policyholders, profits retained Captive insurers e.g., Jupiter and BP - insuring risks for the same group Service company e.g., syndicate delegates company UW to write on behalf MGA - delegated authority, binding authority

Question 31

What does the Lloyd's Market Association (LMA) do?

Answer 31

UNDERWRITERS IN LLOYDS Identify and resolve issues for Lloyd's UWs Works with the corporation of Lloyd's Policy wordings Info service for brokers

Question 32

What does the International Underwriting Association of London (IUA) do?

Answer 32

UNDERWRITERS FOR COMPANY International Underwriting Association of London Representative body Largest for international and wholesale ins/reins companies Protect and strength business environment for member companies operating through London

Question 33

What is the ILU?

Answer 33

UWS FOR COMPANY Institute London UWs M&A

Question 34

What is LIRMA?

Answer 34

UWS FOR COMPANY London Ins Reins Market Association NM and Reins

Question 35

Is the IUA made up for ILU and LIRMA?

Answer 35

Yes

Question 36

What is the Association of British Insurers (ABI)?

Answer 36

Not London Market specific Educate people about UWs

Question 37

What is British Insurance Brokers' Association (BIBA)?

Answer 37

BROKERS British Insurance Brokers' Association Trade association Intermediaries to conduct/comply Promote/influence

Question 38

What is London Market Regional Committee (LMRC)?

Answer 38

BROKERS London Market Regional Committee Integrated in BIBA Non-statutory trade body Represents to regulators

Question 39

What is London and International Insurance Brokers Association (LIIBA)?

Answer 39

BROKERS IN LONDON MARKET Trade body - represents Maintains London's status as the best market

Question 40

What is Managing General Agent Association (MGAA)?

Answer 40

MGAs Represent on behalf of MGAs

Question 41

Why is London a good market?

Answer 41

Capacity Product to suit the client Good claims service History and experience