Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

LM2 > Chapter 8: Business Process > Flashcards

Chapter 8: Business Process Flashcards

1
Q

Quotations

A
  • proposal from insurer of the T+Cs (inc. premium) that they suggest for the risk sent by the broker
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Legal implications of providing quotation

A
  • do not remain valid indefinitely
  • period can be indicated
  • If accepted after expiry, insurer is not obliged to agree
  • if not specified, they apply reasonable time
  • not on risk til quotation accepted
  • if accepted on terms provided, insurer cant back out.
  • If client seeks to change, offer and acceptance starts again
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Firm order

A

Client giving broker formal instruction to proceed with placement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

FON

A

Firm order noted

i.e. committing to contract

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Written line

A

Line insurer has agreed to

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Order

A

Share of risk in one market

e.g. broker has 50% of total order to place

  • broker must know prior to filling insurers
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

When are insurers on risk

A

Depends on inception date of policy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Signing down

A

When risks are written above 100% the shares need to be reduce

  • later when risk is placed in central market databases at xchanging, each insurers written line is reduced proportionally so that the lines add up to 100%
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Signed line

A

reduced line size after signing down

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Calculating signed lines

A

divide by total % and times by new order

e,g. overwritten 150% and WL is 50%

new SL is 50/150 = 33%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

To stand

A

Line will remain the same when re-proportioned

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Calculating signed line with to stand

A

Take away the proportion to stand and divide by the new total line. Multiple by 100% - the line to stand

e.g.

135% total line with 25% to stand

  1. divide by 110%
  2. multiply by (100-75) %
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

reasons for natural termination

A
  • Cancellation by insured
  • Cancellation by the Insurer
  • Fulfilment
  • Expiry of policy period
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Cancellation by insured

A
  • Invoke term as downgrade clause
  • if premium paid upfront insurer will return all
  • dont usually have right to cancel during first 14 on commercial insurance
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Cancellation by the insurer

A
  • Insurer would send the notice of cancellation in a form
  • if broker involved it would go to them first
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Fulfilment

A
  • When policy pays out in full, following a total loss theres nothing left to insure
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Expiry of the policy period

A
  • Most policies last 12 months and policy terminates at the end of the period
  • Insurer will still be obligated to settle claims
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Reasons for unexpected termination

A

Listed in Insurance Act 2015

  • Breach of the duty of fair representation
  • Breach of warranty
  • Fraud
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Breach of the duty of fair representation

A
  • Insurer can avoid the contract and retain the premium if the breach is deliberate/reckless
  • If insurer wouldve applied different terms then the policy is deemed as rewritten from inception
  • if claims were handled before the issue then the insurer will revist the claims
  • if insurer wouldve charged a higher premium, premium is not increased but claims payment is reduced by the same percentage
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Breach of warranty

A
  • Contract is discharged but suspended for the period of the breach
  • insurer cant refuse a claim in the face of a breach if the insured can show it didnt increase the risk of loss occuring
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Fraud IRO claims

A
  • difficult to prove
  • fraudulent devices means legitimate claims can be exaggerating by fraudulent means
  • If insurer can prove fraud in relation to breach of DoFP, it can be discharged from liability and keep premium
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Renewal process

A
  • Quotations process starts again
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Reasons to not want to renew

A
  • Loss making contract
  • Exiting class of business
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Practical reasons for keeping as much business as possible

A
  • Costs less to renew than start over
    *everything already known (less analysis required)
  • More stable the portfolio the more reliable the statistical data is
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

FCA 2017 transparency rule

A
  • Disclose last years premium on renewal
  • Include text to encourage consumers to check cover
  • Identify consumers who have renewed 4 times consecutively and suggest they look around
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Days of Grace

A

Elastic end to previous policy to allow scope for potentially late renewals

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

WNKORL

A

Warranted no known or reported losses

  • warranty used by UWs to avoid losses already occured on a late signed risk
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Proposal form

A
  • Created by insurer / broker to ask questions they consider material to reduce nondisclosure
  • names/address/business
  • Past insurance /claims
  • Turnover
  • Geographical spread
  • Amount of insurance requested
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

incompleted proposal forms

A
  • onus on insurer to follow up any missing info
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Benefits to using MRC

A
  • easier to find information in standardised document
  • easier to create contract document
  • Easier to comply with contract certainty requirements
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Open Market MRC

A
  • Broker places each risk individually one by one
  • visits each UW separately
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Lineslip MRC

A
  • preset group of UWs arranged by broker
  • built in condition that as long as 1/2 of the nominated parties agree to the attachment, everyone else is
  • possible to have a group of UWs that agree their own share on risks
33
Q

Binder MRC

A
  • UW give DUA to external third party
34
Q

6 sections of OM MRC

A
  • Risk details
  • Information
  • Security Details
  • Subscription Agreement
  • Fiscal and regulatory
  • Broker remuneration and deductions
35
Q

MRC: Risk details

A

UMR
Type (physical loss/damage/hull)
Insured
Insured Address
Policy period
Interest (what is being insured)
Limits of Liability
Insured’s retention (Deductibles/excess)
Situation (territorial limitations)
Conditions (T+Cs / wordings)
Loss payee (who proceeds are paid to i.e. bank)
Subjectivities (provisions required before risk i.e. questionnaire)
Law and jurisdiction
Premium (the amount)
Premium payment terms (number of days client has to pay LSW3000 is classic clause)
Tax payable (i.e. IPT)
Recording, Transmitting and storing info
Insurer contract documentation (whether formal policy will be issued to client or if broker submits BID)
Notice of cancellation provisions

36
Q

MRC: Information

A
  • Info provided by insurers at time of placing (such as surveys/reports)
37
Q

Security details

A

Insurer’s liability - sets out what extent/proportion of the risk they are responsible for
Order - share of the risk written under the MRC
Basis of written lines
Basis of signed lines
Signing provisions
Written Lines

38
Q

Percentage of whole

A

10% line of 100%

39
Q

Percentage of Order

A

50% placed and 10% line then total share is half the size of the one before

50% order 100% claim = £100 10% share

50% of £100 = £50

10% of £50 = £5

40
Q

Part of whole

A

Shares shown in financial terms rather than percetanges

41
Q

MRC: Subscription Agreement

A

Slip leader
Bureau leader
Basis of Agreement to contract changes
Basis of claims agreement
Claims administration
Delegated claims agreement
Experts fee collection
Settlement due date
bureaux arrangements (if policy will be delinked)

42
Q

De-linked

A

Risk is sent to Xchanging to be entered into the market ASAP but premium paid sometime later

43
Q

Fiscal and regulatory

A

Tax payable by insurers
Country of origin (insured residence)
Overseas broker
Regulatory risk location
Surplus lines broker
State of filing
US Classification
Allocation of premium coding
Allocation of premium to years of account
Regulatory client classification

44
Q

Broker remuneration and deductions

A

Fee payable by the client
Brokerage amounts
any other deductions from premium

45
Q

CDR

A

Core data record

4 downstream key sets of processing

  • premium validation and settlement
  • Claims matching at first notification of loss
  • Tax validation and reporting
  • Regulatory validation and reporting
46
Q

Purpose of the GUA

A

General Underwriters’ Agreement

  • Create agreement between all underwriters of a MRC
  • Clarify extent of authority
  • Enable flexbility for each CoB
  • Ensure underwriters are advised of changes in not an agreement party
47
Q

Agreement parties

A

Insurers set out in MRC that are responsible for agreeing changes on behalf of others

48
Q

GUA Part 1: Slip leader only changes

A
  • Anything that says leader only
  • Obvious typos
  • Changes which reduces monetary exposure
  • restrictions in coverage
  • return premiums if provided for in the slip
  • Agreement of wording
49
Q

GUA Part 2: Slip lead + AP

A

Anything listed as to be agreed by leader and APs

50
Q

GUA Part 3: All UWs

A
  • Anything that says it has to be agreed by everyone
  • Anything other parties feel should be agreed
  • Changes to geographical scope
  • Policy extensions greater than 1 month
  • Changes to jurisdiction
  • Backdating
51
Q

Marine Insurance Act 1906

A
  • If subject to English law s. 53 states broker is responsible to the insurers for the payment of premium
52
Q

General insurance policy document

A
  • Heading
  • Recital
  • Signature
  • Operative clauses (whats covered under the policy)
  • Exceptions
  • Conditions
  • Schedule
53
Q

Precedent

A
  • condition must be satisfied for either the contract to exist of for the insurer to have liability
54
Q

Condition precedent to contract

A
  • Include requirement to have an insurable interest
  • non marine Insurable interest is required at point of purchase and claim
55
Q

Court interpretation of policy terms

A

according to legal measures of their intention and effect

56
Q

Condition precedent to liability

A
  • usually in commercial insurance
  • specific claims notification clauses
  • “all claims are notified within X days”
  • insurer can refuse claim if provision is not complied
57
Q

Exclusions

A
  • Something UWs wont cover

e.g. War

58
Q

Warranties

A

promise saying:

  • something will or will not be done (by insured)
  • certain fact exists/does not exist
59
Q

Property warranty e.g.

A

Warranty there is a fully operational sprinkler

60
Q

Aviation warranty e.g.

A

Warranty that only personnel with certain number of flying hours will operation

61
Q

Marine warranty e.g.

A

Vessel will not trade in certain areas

62
Q

Consumer Insurace (Disclosure and Representations) Act 2012 warranty

A

removed ability of insurers to rely on the contract clauses to create warranty

63
Q

Suspensive conditions

A

IA 2015, breach of warranty = suspended policy til remedied

64
Q

Insurance Act provisions

A
  • if compiled provisions reduce the risk of particular types of losses, as well as losses in particular times/places
65
Q

IA2015 Changes to the basis of contract clauses

A

IA2015 removes Insurer’s ability to convert representation at the time of binding into warranties

66
Q

LSW

A

Lloyd’s Standard Wording

67
Q

ISO

A

International Standards Organisation

68
Q

LMA

A

Lloyd’s Market Association

69
Q

NMA

A

Non-Marine Association

70
Q

AVN

A

Aviation Market

71
Q

Marine Policy General Provisions (Cargo) 1/1082

A
  • ensures key provisions from the LM are included
  • English law and practice
  • Insurable interest clause
  • Sue and labour clause
  • War and Nuclear exclusions
72
Q

Traditional reasons syndicates miss out on business opportunites

A
  • Business is handled by regional/overseas broker not prepared to use Lloyd’s brokers to access particular market
  • Client is located outside the UK and loyal to local insurers
73
Q

Branch offices

A
  • Allows insurer to write risks on the spot in the country but requires a much higher capital outlay
74
Q

Insurers operating in the EU

A
  • Services
  • Establishment
75
Q

EU insurers: services

A
  • Insurer can stay in own country and write risks coming out of another on a cross border basis (regulated by home regulator)
76
Q

EU Insurers: Establishment

A

Insurer can choose to set up an office in another country and write risks from there

77
Q

Lloyd’s brussels

A

UW activity outsourced to syndicates

each risk written is wholly reinsured back into lloyd’s syndicates

78
Q

Application of the principles of contract certainty

A

A. Terms must be unambiguous when entering contract
B. Insured must be provided contract documentation promptly after entering
C. Insurers must be able to demonstrate A and B
D. Contract changes need to be certain and documented
E. Agreed basis must be included when one or more insurer is involved
F. Final insurer participation must be provided promptly
G. insurer and broker have responsibility to resolve and principle not met

LM2 (10 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions