LM1 Chapter 3 Main Classes of business written in the London Market Flashcards
What is the term used for transferring risk to a reinsurer?
Cede
What is another name for physical damage insurance?
First party insurance and short tail
What is another name for liability insurance?
Third party insurance and long tail
Characteristics of short tail classes
Short time lag between policy period and the final claims being concluded
Characteristics of long tail classes
Longer time lag between the policy period and the final claims being concluded
What does marine insure?
Insure Vessels
Cargoes
Liabilities
Offshore energy risks
Construction risks
Some risks cross over between marine and non-marine such as fine art and specie
What does non-marine insure
Buildings
Liabilities associated with property
Construction for all types of buildings
Professional liabilities
Onshore energy
Personal accident policies (benefit policies)
Characteristics of Aviation insurance
Covers physical damage to aircraft as well as liabilities.
Airport operators take out separate policies
Characteristics of Reinsurance
The same as insurance but the buyer is already itself an insurer
Sold by dedicated reinsurers
Purchased by insurers, reinsurers, mutuals and captives
Benefits of reinsurance
Buyers
Access to new markets, increasing capacity, assistance with starting up new business lines
Sellers
Access to new geographical areas and classes of business
What is Cedant?
Original insurer passing the risk to reinsurers
What is Cession?
The share of the risk passed to reinsurers
What is the collecting note?
Document used to present the claim to reinsurers under an excess of loss contract
What is Retrocedant?
A reinsurer obtaining reinsurance for itself
What is retrocession?
A cession where the entity ceding is already a reinsurer
