LO 10: Understanding the brokers role in the way business is conducted in the London Market Flashcards

1
Q

whos involved in a straight forward insurance transaction

A
  • insurer
  • insured
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

where the broker comes in

A
  • buyer is not well versed in market and seeks an expert advisor
  • can represent the insured in negotations and communication
  • offers independent impartial advise on cover, insurance placing and claim making
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

principal and agent

A

an agent (broker) is authorised by a principal (insured) to bring them into a contractual agreement with a third party (insurer)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

how agent/principal relationships can be created

A
  • consent (TOBA or implied by the payment of commision)
  • necessity (when entrusted with anothers goods)
  • ratification (principal accepts work done on their behalf even if it was outside the agents authority, must be a full acceptance - no cherry picking)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

broker agency for insurer?

A

TOBA can be between brokers and insurers as well eg.
- claims settlement authority
- premium collection
- bind cover (accept risks as if they were the insurer)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

duties of the agent

A
  • obedience
  • personal performance (cant delegate duties)
  • due care and skill
  • good faith
  • accountability
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

duties of the principal

A
  • renumeration
  • indemnity (for expenses and losses when acting on the principals behalf)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

undisclosed principal

A

the agent acts on the behalf of client but acts as if its for them

not super common in the london market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

actual authority

A
  • express authority = from toba which can be oral or written
  • implied authority = action thats required to fulfill express authority
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

apparent authority

A

expected due to role or title and thus assumed by a third party who can have know knowledge of the actualn authority

can apply for a period after the termination of agreement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

ways for agency termination

A
  • mutual agreement
  • termination by either party
  • death, bankruptcy, insanity of either
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q
A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

brokerage

A

% of the premiums, paid by the insurer
- if a client fee is charged this is returned to the client

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

services provided by brokers to insured

A
  • review client needs
  • advise whether the risk is insurable
  • decide on the best market for the risk
  • negotiate terms and conditions
  • provide advice to the client
  • negotiate renewals
  • advise and assist clients in relation to claims matters
  • risk management advice
  • recoveries
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

services provided by intermediaries to insurers

A
  • binding risks (delegate authority schemes, often have some kind of profit sharing with the intermediary)
  • issuing documents
  • settling claims
  • collecting premium
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

market reform contract

A

summary of the risk

  • aka a slip
  • can be supplemented with proposal forms and survey reports
17
Q

insurance act 2015 implications

A

things known by the broker (intermediary), excluding the confidential, is assumed to be known by their client

18
Q

broker market restrictions

A

there are none, they can place the risk anywhere but certainty of the payment of claims should be conisidered

19
Q

inking

A

confirmation of an insurers line on the slip
- they can get a copy of the slip at that point

20
Q

where does the broker submit risk information

A

Xchanging Ins-sure Services (aka bureau)
- manages central market database for risks in Lloyds and IUA companies
- facilitates the transfer of premiums from the brokers account to the insurer
- can submitted electronically using accounting and settlement

21
Q

info broker submits to XIS

A
  • slip
  • premium (presented using london premium advanced notes)
  • tax payable
22
Q

unique market reference

A

unique code given to the risk by the broker
- given to insurers along with other XIS reference codes

23
Q

marine insuance act 1906

A

broker is responsible for the payment of premiums
- not invoked

24
Q

evidence of cover for the insured
- when
- fulfills?

A
  • mrc
  • broker insurance document
  • formal policy (if insurers require it)

should be provided within 30 days of inception

fulfills contract certainty

25
reporting changes to the risk
client informs broker broker negotiates new agreement agreement submitted to XIS
26
claims process
- broker informed by client (helps with maintaining evidence and practical actions, and claim presentation) - broker tells relevant insurers (agreement parties) - broker appoints experts (surveyors, loss adjuster, lawyers) and reports results - negotiation to smooth the claims process - submit claims to Xchanging Claims Services (lloyds central claims database, ) via the Electronic Claims File system - broker receives money - broker pays client - broker stays in contact with insurer for any subrogation
27
claim money movment
done by XCS - requires the correct combination of insurer agreement - pays out expert fees as well - generally paid to broker
28
enterprise act 2016
for insured who think they got paid late - a year to file for damages must consider: --type of insurance --size/complexity of claim --factors outside of the insurers control