Chapter 7 Flashcards
What are controls LM insurers must put in place to ensure compliance w/ another countries regulations that it’s writing risks for?
•Obtain info about applicable rules + regulations - many regulators require regular reporting of risks written, premiums paid, taxes, etc
•Ensure compliance is done on time
•Regulators require data evidence to show compliance + regulation
•Internal controls, such as authority limits, peer review, operating system controls (e.g. warnings)
What is solvency?
•The balance between assets + liabilities
•PRA requires additional padding of assets to ensure assets exceeds liabilities enough to protect business from large claims
What is Solvency II, as an EU regulation, and its aims?
•It’s EUs Europe-wide solvency rules
•It introduces economic risk-based solvency requirements across all EU member states
•Aims for better regulation, enhanced policyholder protection, improved competitiveness of EU insurers, + deeper integration of EU insurance market
What are the 3 pillars of regulation in Solvency II?
- Quantitative
- Supervisory
- Market discipline
What are sanctions?
•They’re a ban
•Governments can ban all parties from doing business w/ certain individuals, businesses, governments, or countries
Why are sanctions imposed?
•To control the access to funds for regimes, companies/people - e.g. because of a link to terrorism, etc
•Political pressure
•To enforce the concept of respect for democracy and human rights
•To maintain + restore peace in a country or region
What are the different types of financial sanctions?
•Prohibiting transfer of funds to a sanctioned country
•Freezing the assets of a company/individual
•Freezing the assets of a government, companies, + residents
What is the ‘office of financial sanctions implementation (OFSI)’ responsible for?
Implementation + admin of international financial sanctions in UK
What tasks do the ‘office of financial sanctions implementation (OFSI)’ do?
•Licensing exemptions to financial sanctions
•Working w/ international partners to develop frameworks for asset freezing
•Working w/ foreign + commonwealth office on the design of individual financial sanctions regimes
•Giving advice to treasury ministers on domestic decisions
•Domestic legislation on financial sanctions
What does ‘lifted regimes’ mean in sanctions?
When sanctions are lifted
What does the ‘department for business, energy, + industrial strategy (BEIS)’ manage?
Trade sanctions - could include travel bans, bans on import/export of cargos, etc
What are the US sanctions on Cuba?
•Helms-Burton Act 1996 restricts the conduct of business by US entities w/ or in Cuba
•Can not provide business services to a Cuba company or foreign company’s Cuba-related business
•Must be complied by all US citizens + permanent residents, people/organisations in US, + branches/subs of US organisations
How is piracy a practical problem with sanction?
•Ships been attacked recently in Gulf of Guinea + crew have been held for ransom, w/ ship being released
•US + UK banned paying ransoms to specific individuals
•Around Gulf of Guinea, countries aren’t on the sanctions list - so, could impact LM insurers when dealing with/ pirates due to their identity not being clear
How do insurers find out about sanctions?
•Market associates provide guidance
•Lloyd’s insurers + brokers can access Crystal system on Lloyd’s website
•Websites for HM Treasury + US Department of Treasury, OFSI, + Office of Foreign Assets Control (OFAC)
What are sanctions clauses?
LM insurers + reinsurers will insert sanctions clauses into their policies to make clear what position their position will be
What is the ‘export control order (2008)’ issued by the UK Government?
Requires that a license is obtained if there’s a movement of arms/military goods between 2 overseas countries and if there’s involvement of UK person/entity
What are the 3 categories of license (export controls) of the ‘export control order (2008)’ issued by the UK Government?
A. Gallows, guilotines, + electric chairs - require insurers to obtain a license from UK government if they’re being insured
B. Rocket launchers + hand grenades
C. Tear gas equipment + pepper spray - B + C require a license if insurance is being obtained for a journey to embargoed (trade ban) country - e.g. Iran, China, etc
What are the objectives of the General Data Protection Regulation (GDPR) 2018?
•Updating of the Data Protection 1998
•Widen scope of data protection
•Data protection fit for a global economy
•Close loopholes companies exploit
•Give individuals more effective rights
What are the data protection legislations?
UK General Data Protection Regulation (UK GDPR) + Data Protection Act (DPA) 2018
What is data protection legislation?
•Applies to all persons in the UK who process personal data
•It gives subjects rights + places obligations on data controllers + data processors
•It applies to personal data - any info where an individual can be identified directly or indirectly (e.g. address)
Under data protection legislation, what can organisations claim is a legal basis for processing personal data?
•Consent is freely given
•Needs to be a contract w/ the individual
•Legal obligation - processing is necessary to comply w/ the law
•Vital interests - processing is necessary to protect someone’s life
•Public task - processing is for a task in the public interest
•Legitimate interests
What are the legal rights that individuals have under the data protection legislation?
•Right to be informed
•Right of access - to know if organisation is starting their data
•Right of rectification - can have data rectified
•Right to erasure - can have data erased
•Right to restrict processing
•Right to data portability - e.g. when changing banks can transfer data safely
•Right to object
•Rights in relation to automated decision making + profiling - can’t be a decision based on non-human interaction
How does the data protection legislation apply to international data transfers?
It governs the transfer of personal data from UK outside the EU to 3rd countries or international organisations
How should an organisation report a data breach, according to data protection legislation?
•Must report to the Information Commissioner’s Office (ICO) when there’s likely to be a risk to data subjects
•For serious breaches, the ICO may levy fines of up to £17.5m or 4% of annual global turnover if higher
