LM1 Flashcards
What is a fortuitous event?
To be insurable - must be an accident or unexpected
What is a fundamental risk?
Large amounts of people effected
What is a speculative risk?
Non insurance - gambling
What is a particular risk?
Doesn’t happen to everyone
What is a pure risk?
The possibility exists - example travelling on a plane
Risk is assessed in two ways, what are they?
Frequency and severity
What is the subject matter of insurance?
The thing that is insured
What is a peril?
An event like fire or break in, what gives rise to a loss
What is insurance?
A risk transfer mechanism
What is facultative insurance?
Reinsurance purchased by an insurer for a single risk or a defined package of risks
What is primary and secondary insurance?
Primary insurance pays first i.e. your medical bills, however secondary insurance pays some or all costs left after the primary has What is paid
What does Cedent mean?
A party who passes the financial obligation for potential losses to the insurer
What are PNI Clubs?
protection and indemnity - Provides cover to shipowners
What is the financial ombudsman service?
Settle complaints between consumers and businesses
What does the international underwriting association do?
Protect and strengthen business environments for its members
What is a managing agent?
Organisations that have been given authority on behalf of the insurer to accept risk, issuing and handling claims
What does a members agent do?
Advise their clients on advantages and disadvantages of investing in the Lloyds market
What does the council of Lloyds do?
They are responsible for the management and supervision of the market
What is pooling of a risk?
Its when the losses of the few are met by the contribution of many
What is subrogation?
Following payment the insurer takes over the insureds right to recover payments from third party’s responsible for the loss
What does proximate cause mean?
The cause of the lost is straightforward and there is no need to investigate for a long period
When must key information be disclosed to the insured?
During the proposal stage
What is risk perception?
Probability combined with likelihood of a risk occurring
How much of a non compulsory insurance claim with the FS comp scheme pay if the insurer becomes insolvent?
90% of the claim
What does a company can be wound up mean?
This can be the ultimate action when a company fails to meet FCA requirements
Who does an appointed representative usually act on behalf of?
An intermediary
Who usually contacts underwriters on a firm order?
The broker
What is a firm order?
An offer made by or on behalf of an insured to an insurer to enter into a contract
Death in service usually amounts to how many lump sum payments?
Two to four
Which insurance sector is most likely to have a waiting period?
Marine
What is an example of contingency insurance?
Death and disgrace
What is covered under midstream insurance?
Pipelines
What is the principle between supply and demand?
The price of the commodity and the quantity traded
Major catastrophe effects the insurance life cycle in what way?
It shortens it
When the price of goods or services change the impact on the demand for them is known as?
Elasticity
What is a main reason insurers leave the market?
Large loss suffered
What does captive insurance mean?
Solely writes business for sister companies within the same group
What does contract certainty mean?
To ensure all parties are fully aware of the coverage and terms
What is the number of members in the council of Lloyds?
9
The maximum financial reward for FOS is?
£375,000
What act does whistle blowing fall under?
Public interest disclosure act
What is the maximum sentence for money laundering?
14 years
What is the maximum amount of time verification records can be stored for?
5 years
What happens when there is a serious breach of Lloyds/FCA rules?
Action is taken by Lloyds and the FCA
How many high level principles, concerning placement with subscription markets have been issued?
5
What is the body responsible for enforcement of data protection requirements?
Information commissioners office
What proportion of business written in the London market is from UK based insureds?
25%
What type of insurance covers risks of predetermined class of business?
Treaty
Applying for insurance/paying premium is an example of which stage of money laundering?
Placement
Within syndicates underwriters are employed by?
Managing agents
What is the organisations issued high level principles, concerning placement of business with subscription markets?
BIPAR ( European Federation of insurance and financial intermediaries)
What is the body responsible for identifying emerging risks?
Financial policy committee
A new Lloyds insurance broker wishing to offer independent advice must receive approval from which body?
FCA
What is the body responsible for promoting interests of the London market?
International underwriting association of London
Management structure and rules by which Lloyds are governed by which body?
Acts of parliament
Solvencies II main purpose?
Make insurers more capable of withstanding shocks
What is a corporate offence under money laundering?
Failing to prevent bribery
Surplus lines status for businesses in USA?
Local or admitted markets cannot accept the risk without asking first
Which body is responsible for the implementation/admit of international sanctions in effect in the UK?
HM treasury
Which body maintains claims for Lloyds only?
Xchanging
What is a benefit of law of large numbers?
Assists insurers to make reliable claim payment predictions
How does a broker usually place complex risks within the London market?
Electronic placing systems and direct communication
