LO 11: Understanding the underwriter's role in how business is conducted in the London Market

Question 1

role of the underwriter

Answer 1

makes decisions on weather an insurer should accept the risks presented (or how much) and the t&c (including premium amount)

Question 2

scratch

Answer 2

combination of initials and date used to indicate that they have seen the presentation made

Question 3

who employs underwriters

Answer 3

managing agents
insurance companies

Question 4

functions of an underwriter

Answer 4

manage the pool of premiums effectively

Question 5

subscription market

Answer 5

more than one insurer participates in the same risk, each takes a fixed percentage

Question 6

why underwriters only want a portion of the risk

Answer 6

• risk size and authority level
• balancing portfolio geographically
• broker input (broker wants to spread good risk among many insurers)
• entering a new class of business

Question 7

lead underwriters role

Answer 7

• review the risk presented by the broker
• decide whether to accept
• decide t and c
• quote premium

Question 8

characteristics of a good market leader

Answer 8

• provide a good quote
• credible and supportable

Question 9

following market

Answer 9

• writes the remainder of the risk
• has distinct contract with the insured
• dont have to have the exact same terms as the leader (requires broker to present multiple sets of info to Xchanging, inadvertently creates more leaders = ghost leaders)

Question 10

competition law

Answer 10

if a follower negotiates higher premiums this doesnt apply to previous writers as well

Question 11

european federation of insurance intermediaries (BIPAR)

Answer 11

put together high kevel principles about placement of business in a subscription market

Question 12

overall leader

Answer 12

first to write

Question 13

slip leader

Answer 13

lead the london market slip (lloyds or company)

Question 14

bureau leader

Answer 14

there are 2:
- first lloyds underwriter on the slip
- fisrt company underwriter on the slip

Question 15

bind change categories (under the general underwriters agreement)

Answer 15

part 1 = non material changes (agreed by leader only)
part 2 = leader and some agreement parties (number of participants is unlimited), not p1 or p3
part 3 = material changes agreed by all underwriters

Question 16

single claims agreement party (scap)

Answer 16

eligible claims allowed to be agreed by one insurer (lloyds syndicate or uk authorised) only
- stated at the time of placing