Chapter 8 - Business Process Flashcards
What is a quotation?
Proposal or indication from the insurer as to the T&Cs (including premium) that it is suggesting for the risk put forward by the broker
What is written line?
The line that the insurer agrees to during the formation of a contract
what is the order?
The share that the broker/insurer has of one risk e.g. a broker has a 50% order to place.
What is signing down?
The process in which shares of a risk are reduced to 100%, which means that later in the process each insurer’s written line is reduced proportionately so that the total line add up to 100%, reduced line size known as the SIGNED LINE
What are the reasons for natural termination of an insurance contract?
Cancellation by the insured
Cancellation by the insurer
Fulfilment
Expiry of the policy period
What are the reasons for unexpected termination under the insurance act 2015?
Breach of the duty of fair presentation
Breach of warranty
Fraud
Why might an insurer not want to quote for renewals?
The contract has been loss-making
They are exiting that class of business
Why might an insurer want to renew as much as possible?
It costs less to renew the business than to write it from scratch
The more stable the portfolio of clients the more reliable the statistical data
What are days of grace?
Best described as a perceived elastic end to the previous policy which allows the insured some scope should they be late in renewing their insurance
What general questions does a proposal form include?
name, address, nature of business
info about past insurance history, including previous losses and claims
turnover and other info relating to exposure size
geographical spread of the risk
amount of insurance being requested
What are the distinct roles of a Market Reform Contract (MRC)?
A document which the broker puts together that summarises their client’s risk into a standardised format for presentation to UW
also the document on which UW can formally indicate their written lines in a non-electronic placement
It can be the document which is sent to the client as their copy of the insurance contract
What is an open market MRC?
where the broker places each risk individually one by one, and visits each UW separately
What is a lineslip MRC?
A preset group of UW arranged by the broker, with an in-built agreement that as long as the nominated one or two of them agree to the attachment of a particular risk to that contract, the remainder will be bound to the risk as well
What is a binder MRC?
Where UW have given delegated authority to an external third party that operates within strict parameters. 3rd party operates within a preset limit of authority and reports back the risks that they have written each month
What are the 6 sections of an MRC?
Risk details
Information
Security Details
Subscription agreement
Fiscal and regulatory
broker remuneration and deductions
What will the core data record (CDR) provide?
The critical transaction related data that must be captured at the point of bind to complete:
Premium Validation and settlement
Claims matching at first notification of loss
Tax validation and reporting (Lloyd’s only)
Regulatory validation and reporting (Lloyd’s only)
What is the purpose of a General Underwriters Agreement (GUA)?
Create an agreement between all the UW on a particular MRC as to who will deal with any contract changes
Clarify the extent of the authority given to leaders and any other identified UW to agree the changes
Enable flexibility for each class of business to refine the rules to suit their own requirements
Ensure that all UW are advised on the changes even if they are not involved in the agreement process themselves
What are the sections in a Market Reform Contract Endorsement (MRCE)?
Risk and endorsement identification
Contract changes
Info (supporting, if required)
Agreement
Contract administration or advisory - sections such as subscription agreement are shown here
What is a London Premium Advice Note (LPAN)?
For insurers who are using central settlement, typically one is created for the Lloyd’s market and one for the company market, but more might be required if there are complex tax or other regulatory coding splits needed
What is the structure of a general insurance policy document?
Heading - name of insurer
Recital - states that the insured and insurer are entering into a contract
Signature
Operative clauses - setting out what is covered
Exceptions
Conditions - can be expressed or implied
Schedule - makes it personal and specific to the insured
What are the two types of condition?
Condition precedent to contract - includes the requirement to have an insurable interest, if no insurable interest exists at the start of the contract, the policy is not valid
Condition precedent to liability - the condition does not have to be stated for the court to interpret it as one, also true that calling it one does not necessarily make it one.
What are some examples of warranties (Something will or won’t be done/something does or doesn’t exist)?
Property risk - warranty that there is a full operational sprinkler system
Aviation - A warranty that only personnel with a certain number of flying hours will operate the equipment
Marine - warranty that the vessel will not trade in certain areas of the world
What do the codes LSW, ISO, LMA, NMA and AVN mean?
LSW - London Standard wording
ISO - International Standards Organisation
LMA - Lloyd’s Market Association
NMA - Non-Marine Association
AVN - Aviation Market
The codes applied to clauses often indicate origin of wording and follow this convention
What are the methods for conducting LM business?
Service Companies
Branch Offices
SERVICES (means that insurers can stay within their own country and write risks coming out of other countries on what is known as a cross border basis) and ESTABLISHMENT (means that insurers can choose to set up an office in another country and write business there)
Lloyd’s Brussels - access EEA + Monaco business
Delegated underwriting
