Chapter 9 - Delegated underwriting Flashcards
What is delegated underwriting?
Authorising another party to underwrite risks on your behalf
Can authority be given to different parties? Who?
Yes
Another insurer - consortium or lineslip
Broker or another entity - binding authority
What is a consortium? Is there a lead? How long do they last?
A consortium is a group of insurers which have formed an agreement to accept risks
together (to criteria), in a set proportion
One insurer will be the consortium leader/manager
Year - four number code
What is a lineslip aka facility?
Similar to consortium but key difference is group of insurers set up by a broker
Authority is given to 1 or 2 of them to bind the other insurers to any risks
Can lineslips be found with no delegation involved?
Yes
What is a binding authority?
Delegating authority to a non insurer separate party aka coverholder
Broker can be a coverholder - conflict of interest as both client and insurer are their clients
What is an MGA - Managing General Agent?
Coverholder who has no other clients than insurers
Broker cannot be an MGA - might have sister company in large corporate structure
What is the first step for a binder?
Identify a likely coverholder
Can a coverholder be a service company which is a member of the same wider
corporate group as the insurer?
Yes
Is approval needed by Lloyd’s to be a Lloyd’s coverholder? What do they consider? How do they apply? How long does it take for Lloyd’s to approve? Is it needed for company market?
Yes
Suitability, experience, systems and controles, financial status, authority to operate in specified territories
ATLAS - online platform - 25 days for Lloyd’s to approve
Must sign ‘coverholder undertaking’
No
Do applications from new Lloyd’s coverholders have to be sponsored by a broker and supported by a managing agent?
Yes
Can also be sponsored by a managing
agent without a broker being involved
What is required by an insurer supporting the approval of a new coverholder?
Due diligence - only delegate authority to competent organisations
Can coverholders have either full or limited binding authorities?
Yes both
Is there a consortium template for insurers to use?
Yes
What are the 3 parts to a binding authority?
Schedule
Wording
Non-schedule agreement (looks like a MRC)