CHAPTER 8 - D Flashcards
What are service companies in the context of the Lloyd’s Market?
Service companies operate in the Lloyd’s Market whereby managing agents set up insurance organisations in various locations to underwrite business on behalf of the syndicate.
They are backed by the syndicates and must comply with the rules of the Lloyd’s Market.
What is a key reason that syndicates in the Lloyd’s Market might miss business opportunities?
Some business may be handled by regional or overseas brokers who do not use Lloyd’s brokers and do not need the Lloyd’s Market.
Additionally, clients located outside the UK may remain loyal to local insurance providers.
What is the advantage of the Lloyd’s Market regarding regulatory permission?
Lloyd’s obtains regulatory permission centrally for syndicates to write risks from various countries without needing a physical presence.
Insurance companies, on the other hand, typically must obtain permission individually and often need a branch office.
What are the two ways insurers can operate within the EU after the UK left the EU?
- Services: Insurers can write risks from other countries while staying in their own country, regulated by their home regulator.
- Establishment: Insurers can set up an office in another country to write risks from there.
UK insurers now require individual regulatory approval from any EU country where they have clients.
What is Lloyd’s Brussels?
Lloyd’s Brussels is a Belgian insurance company, a wholly owned subsidiary of Lloyd’s, set up to allow syndicates to operate cross-border in Europe after the UK left the EU.
It handles risks written by Lloyd’s syndicates and is authorized to write direct and reinsurance business in the EEA and Monaco.
What does the term ‘delegated underwriting’ mean in the London Market?
Delegated underwriting refers to asking and authorizing another party to do something on your behalf, extensively used to obtain business in the London Market.
The details of delegation, including to whom authority is delegated, will be discussed in chapter 9.
True or False: Lloyd’s Brussels conducts all underwriting activities independently of Lloyd’s syndicates.
False
The day-to-day underwriting activity is outsourced to the Lloyd’s syndicates, and risks are reinsured back into the syndicates.
Fill in the blank: Insurers working within the EU can operate on a _______ basis, meaning they write risks from other countries while staying in their own country.
[cross-border]
This operation is regulated only by their home regulator.
What happens to risks written by Lloyd’s Brussels?
They are wholly reinsured back into the Lloyd’s syndicates.
This maintains a similar handling of risk throughout its lifecycle.
