Chapter Nine Flashcards
Subscription Agreement
What is the significance of the subscription market in the London market?
The subscription market allows multiple insurers to participate in the same risk, each taking fixed percentage which helps spread the risk.
What is the primary role of an underwriter in the London market?
The primary role of an underwriter is to decide whether to accept risks presented oh behlaf of an insurer and to determine the terms and conditions of that acceptance.
Why might an underwriter choose to take only a small percentage of a risk?
An underwriter may take a small percentage due to their authority limits, the need to balance their portfolio or because they are new to a class of business.
What happens if a following market underwriter requests a higher premium than the lead underwriter?
If a following market underwriter requests a higher premium and the lead and previous followers cannot automatically increase their premiums as well.
What is the difference between a lead underwriter and a follow underwriter?
A lead underwriter is responsible for setting the initial terms and conditions for a risk, while fellow underwriters take a percentage of the risk but are not obliged to accept the same terms.
What does the term ‘scratch’ refer to in the context of underwriting?
The term scratch refers to the initials and date that underwriters use to indicate they have reviews a risk presentation or bound the risk.
What is the role of the leader in a subscription market?
The leader reviews the risk presentation first, decides whether to accept it, sets the terms and conditions and quotes a premium.
What is a ‘smart follow’ underwriter?
A smart follow underwriter used data and trackers to manage portfolios with lower operational costs compared to traditional setups.
What is the purpose of the general underwriters agreement (GUA)?
The GUA categorises changes to risk into non-material, general and material changes to streamline the agreement process among underwriters.
How do market agreements help in the claims process?
Market agreements aim to streamline the claims process by establishing clear roles and responsibilities among the leaders and other underwriters involved.
