Lloyds Market Flashcards
What is Lloyd’s
Marketplace
Society of members
Regulate by both FCA and PRA (Member agents and brokers are regulated by FCA only)
Lloyd’s Act 1982
Council of lloyds create
Functions and makeup of the Council of Lloyd’s
3 working, 3 external and 9 nominated members
Resolve issues
Make decisions
Requirements
Create and manage rules and byelaws
Responsible for management and supervision of the market
Lloyd’s Syndicate
Groups of individuals/investors who carry lloyd’s risks (provide financial banking)
Also referred to as members or Names
No separate legal existence
Annual ventures (identified by name, number AND YOA)
Membership must be renewed each year
Require another entity to perform day-to-day operations of an insurer (Managing Agent)
Managing agent
Responsible for day to day insurance operations for a syndicate
Appoints underwriters to accept risks on behalf of the syndicate
Manage underwriting of one or more syndicates
Authorised person, regulated by the PRA for prudential requirements and FCA for conduct of business issues
Capital
Investment put into the market by investors
Provided by corporate names rather than individuals
Lloyd’s must be satisfied that the means are adequate before accepted prospective members investment
Lloyd’s need to feel comfortable prospective investors can afford to pay out claims
Function of Members’ agents
Advise clients on the positives and negatives of investing in the London market
Investment can be spread across several syndicates not necessarily managed by the same managing agent
Communication channel between the member and managing agencies
Advises member as to any changes in investment portfolio for new yoa
Company market vs Lloyd’s
There is no equivalent for lloyd’s as a provider of a physical marketplace
Regulation of london
PRA - regulates insurers operating in London for prudential requirements (solvency and capital)
FCA - Regulates conduct business issues
EU companies are regulated by their own home regulator
International Underwriting Association of London (IUA)
Trade body for company market
No regulatory power
Worlds largest representative org for re/insurance companies
Brexit impact on london market
UK companies have had to set up EU based operations to continue to write and service EU business
EU based insurer can benefit from Home State rules
UK regulated insurer would have to obtain regulatory approval in each country
Lloyds international Liaison
Engage with overseas regulators on behalf of whole Lloyd’s market
Types of non-lloyd’s insurers
Limited Liability Companies (LLC)
Mutual Indemnity Associations
Mutual Companies
Captive insurers
Source of capital for LLC and Mutuals
Shareholders (investors) provide capital and therefore the capacity for the insurance company to accept/write risks
Fundamentals of a Lloyd’s broker
Intermediaries that act as the agent of the re/insured for both placing and claims
Must be authorised by the regulator (FCA)
Brokers can apply to lloyds to get second accreditation as a Lloyd’s broker (non-lloyds can still place business in london market)
