Chapter 9 - Delegated Underwriting Flashcards
What business process would brokers usually delegate?
Document production
What are the two contract types which insurers delegate to other insurers?
Consortium and Lineslip
What are the 3 key features of a consortium contract?
Group of insurers accept risk in a pre-agreed way
Consortium leader negotiates on behalf of all and handles claims
Lasts for a year, identified by unique 4 letter code
What are the 4 benefits of a consortium contract?
Shorter placing process
Consortium leader get commission
Followers get access to business without needing to visit a broker
Smaller admin task
What is a lineslip contract and how does it differ to consortium?
Group of insurers are brought together by a broker agreeing on a risk
Broker decides how to place risk (i.e. in open market or through lloyds)
Why would a lineslip only have 1 insurer?
Broker can process risks in an aggregated format
Why would a lineslip have participants with no delegation?
Broker can say that they already have a pre-agreed group of insurers
What are the main benefits and disadvantages to a lineslip?
Broker can place more efficiently
Insurers access business without having to place risk themselves
Lead does not get commission
What do the following terms mean in a lineslip?
Declaration, Bulking, Facility
Declaration: Individual risk being presented and attached
Bulking: Processing premium in bulk
Facility: Another name for lineslip
Why would a company use delegated underwriting? (3)
Manpower
Access to local business
Access to other business outside of London Markets
What does coverholder mean in delegated underwriting?
Partner in the DUW agreement, holds authority under a DUW agreement
How would a broker manage a conflict of interest?
Split team so that the DUW team does not have contact with insured. Only insurers
What is an MGA?
A coverholder who only has contacts with insurers
What are the requirements for a new coverholder? (types of info)
What criteria would the managing agent consider? (4)
Needs approval from Lloyds, types of work, geographical location
Consider:
Experience, Controls, Financial status, underwriting authority
What is the system for coverholder application and how long till approval?
What is the coverholder undertaking?
ATLAS, 25 working days
Set of agreements expected by Lloyds, reviewed annually
What are the two types of coverholder in Lloyds? What are the differences
Service company, approved coverholder
Service company - setup as separate company, underwrites business as binding authority from syndicate. Usually participates in personal lines
What are the 4 types of authority?
Full authority
Predetermined rates - price matching allowed on rewneals
Predetermined rates with no discretion - No change allowed from pricing matrix
Prior submit - all risks reviewed with UW
What are the 3 parts of a binding authority agreement?
Binding wording
Binding schedule
Non schedule sections
What are the 4 principles of lloyds which apply to delegated underwriting? Highlight each principle
1 - Profitability. Appropriate controls and reporting in place, aligns to main business plan
4 - Claims management - Clear reporting and appetite for delegating claims
5 - Customer outcome
11 - Regulatory & Financial crime. Training and annual crime report
What is the system called which registers DUAs in Lloyds?
Delegated Contract Oversight Manager (DCOM)
What is a bordereaux used for and what is the name of the system which needs to undertake this role?
Identify breaches of authority. DDM - Delegated Data Manager is used for london markets
What is the name of the document used for DUA?
Certificate
Who is responsible for organising audits in DUA and what are the some of the areas they might consider?
Leader. Underwriting, IT, Finance
What is the difference between delegation and outsourcing?
Delegation = underwriting. Outsourcing = everything else
What are the common rules for DUAs?
Consortium - Leader handles claims
Lineslip - Line leader
Binding authority - Coverholder or separate entity
How does Lloyds and companies differ on claims handling for money
Lloyds - Centralised office to handle claims and movement of money
Companies - automated once parties agree on claims
What is Lloyds rule on registering binding authority agreements?
All but restricted underwriting agreements must be registered
