CHAPTER 9 - A Flashcards
What parties can delegate their activities in delegated underwriting?
Insurers (both Lloyd’s and companies) and brokers.
To which parties can underwriting authority be delegated?
Underwriting authority can be delegated to:
* Another insurer (or set of insurers)
* A broker
* Another entity altogether.
What is a consortium in the context of delegated underwriting?
A consortium is a group of insurers that have formed an agreement to accept risks together in a set proportion.
How do insurers in a consortium typically accept risks?
They agree on a proportion, e.g., one insurer might take 50% while others take 12.5%.
What role does the consortium leader play?
The consortium leader accepts or declines risks on behalf of the consortium and handles claims.
What is the usual duration for a consortium arrangement?
A consortium is usually set up for a year.
What is a lineslip in delegated underwriting?
A lineslip is a set of insurers brought together by a broker to write similar business on similar terms.
What is the key difference between a consortium and a lineslip?
A consortium is formed by insurers, while a lineslip is organized by a broker.
What is a Market Reform Contract (MRC)?
An MRC is a specific form used for lineslips.
What is the term ‘security’ used for in the insurance market?
‘Security’ refers to the assurance that an insurer has on a risk, e.g., ‘I am using Lloyd’s security on this risk.’
What does the term ‘declaration’ refer to in lineslip terminology?
The individual risk presented for agreement by the broker to be attached to the lineslip.
What is the difference between a bulking lineslip and a non-bulking lineslip?
A bulking lineslip allows aggregation of premium presentations, while a non-bulking lineslip requires each risk to be presented individually.
What is another term for a lineslip?
Facility.
What is a binding authority or binder in delegated underwriting?
A contract where an insurer delegates underwriting authority to a broker or another entity.
True or False: Commissions or fees for leaders are common in lineslip arrangements.
False.
