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LM1 > LO 6: Understand the structure of the London Market > Flashcards

LO 6: Understand the structure of the London Market Flashcards

1
Q

what is lloyds of london

A

market place
society of members

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2
Q

lloyds act 1982

A
  • brought council of lloyds into creation
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3
Q

role of the corporation of lloyds

A
  • provides infrastructure for the market plaec
  • responsible for international liasion
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4
Q

regulators of lloyds
- society of lloyds
- managing agents
- brokers
- member agents

A

top 2 = fca and pra
bottom 2 = fca

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5
Q

lloyds council structure

A

3 working = works for broker or managing agent now or before retiring
3 external = member of societuy oif lloyds (gives capital)
9 nominated = from outside the market

  • working and external elected by lloyds members
  • chairman and deputy chairman are ellected annually by the council
  • all members are fca approved
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6
Q

lloyds council powers

A

can issue
- resolutoins
- requirements
- rules
- byelaws (30 atm)
to organisations working within the market

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7
Q

syndicate
- definition
-
-

A
  • groups of private individuals or corporates (aka names or underwriting members) that give capital
  • sum of members, not a separate legal entity hence they have to be reinstated each year
  • each has own unique name/number combo
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8
Q

‘syndicates in a box’ definition

A

write innovative new business

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9
Q

managing agent definition
- definition

A
  • does the day to day ‘insurer’ operations for the syndicate
  • company
  • can manage one or more syndicates
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10
Q

managing agent
- jobs

A
  • ## appoint underwriters
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11
Q

annual life of a syndicate

A
  • lasts a year
  • stays open for 24 months after, receiving premium and claims
  • closes books after year 3, reinsures the possibility of future claims with the next years account (reinsurance to close)
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12
Q

reconstruction and renewal 1992

A
  • rebuilding of the market
  • movement away from private individual names and towards corporations
  • creation of equitas = reinsurance vehicle
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13
Q

syndicate capacity

A

how much business they can write

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14
Q

member agents

A
  • advise corporate and individual names on their investment (who they provide capital to)
  • advise on the advantages and disadvantages of investing in the london market
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15
Q

limited liability vehicle

A

how private members now enter the market
- namecos
- limited liability partnerships

  • minimum capital funding £350,000
  • each member must do £100,00 for LLP
  • losses limited to the amount in the vehicle
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16
Q

security tenure

A
  • agreement to give member an automatic right to participate the next year
  • tradeable asset
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17
Q

limited tenure

A
  • termination after a fixed time or notice period
  • syndicates that operate on this model need permission from lloyds
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18
Q

insurance undertakings

A

company transacting in london market
pra authorisedd

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19
Q

PRA role in london markets

A

regulates prudential solvency and levels of capital

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20
Q

FCA role in london markets

A

regulates for conduct of business isues

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21
Q

structure of nonlloyds insurers
- types

A
  • limited liability companies
  • mutual indemnity associations = professional managers fun a pool of risk composed of like minded individuals (Protection and Indemnity Associations for marine liability)
  • mutual companies = owned by the policyholders, profits are either retained in company or returned to the policyholders (national farmers union)
  • captive insurers = solely write the risk of sister companies
  • service company = writes business for a lloyds syndicate
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22
Q

broker definition

A

professional intermediary that acts on the behalf of the re/insured in the claims and placing process

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23
Q

broker regulation

A

fca
lloyds, nonlloyds brokers can still operate in the lloyds market

24
Q

managing general agents

A
  • acts on behalf of the insured to accept risks, issue documents and handle claims
  • authority given by a binding authority contract
25
Q

can international insures operate in the london market?
- how
- why

A

yes through
- syndicates
- company

lloyds brand adds to theirs
access to worldwide client base

26
Q

lloyds market association (LMA)
- purpose
- what
- who

A

enable the success of our memeber and of the lloyds market in delivering expertise, education and connecting and synthesisng market opinion

provides representatio, information and technical services to underwriting businesses

all managing and member agents + associate membership for brokers n lawyers

27
Q

international underwriting association
- purpose
- what
- who

A
  • transform business processes by driving a moderning agenda
  • deliver knowledge and expertise for innovative underwriting and claims handling
  • represent memebers on matters of public policy and regulation
  • representative organisation for international and wholesale insurance and reinsurance companies
  • institute of london underwriters (ILU)+London Insurance and Reinsurance Market Association (LIRMA)
  • no power over memebers
28
Q

association of British insurers
- purpose
- what
- who

A

-

  • bring the right people together to inform public policy and debates
  • be public voice of the sector
  • encourage customer understanding of the sectors products and practices
  • support a competitive insurance industry in the uk and abroad
  • all of uk with some london market memebers
29
Q

british insurance brokers association (biba)
- what
- purpose

A
  • major trade associate of insurance intermediaries
  • encourages fundamental principles that govern professional conduct
  • ‘to represent and protect the best interest of our insurance broker and intermediary memebers’
    promoting
    maintaining and developing
    supporting memebers
    aiming
30
Q

london market regional commitee

A

within biba, represents interest of london based memebers

31
Q

london and international insurance brokers association (LIIBA)
- key priorities
- define

A
  • ‘ensure london remains where the world want to do business by continuing the transformation of market processes and maintain the highest professional standards’

key priorities
- represent member interests to government and regulators
- assist with tax and regulatory systems
- support members with legislative and technical changes

32
Q

managing general agents association
- key priorities
- define

A
  • voice of managing general agents and drives best practices within the industry

key points
- represent (views of memebers to government and member interest to regulators)
- set
- assist
- work
- create
- promote
- seek
- listen

33
Q

strong points of the london market

A
  • capacity
  • entrepreneurial spirit (take on new risk)
  • good claims service using knowledgeable people
  • history and experience
34
Q

risk placing process

A
  • broker makes slip
  • finds a leader who sets terms and accepts a certain amount
  • broker finds other underwriters from any market to fill the slip
  • once filled the riskis submitted to Xchange Ins-sure Servies (XIS)
  • ## premiums paid to insurers (facilitated by XIS) with the brokerage deducted
35
Q

market reform contract

A
  • aka slip
  • summary of risk and the suggested terms and conditions
  • provided by the broker
36
Q

contract certainty

A
  • all parties are fully aware of the coverage and the terms of the policy at the time of inception
  • contract documentation can be provided afterwards (within 30 days)
    policy
    copy of slip
    broker insurance document (bid)
37
Q

claims process

A
  • broker notified by the client and helps to maintain evidence
  • broker identifies the agreement party = group of insurers that need to see/agree the claim
  • present the claim on paper or electronically
  • Xchanging systems shares the claim to all insurers on the risk
  • broker liaises with any experts (lawyers, surveyors, loss adjusters) requested by the insurers
  • money for settled claims goes from insurers to third party (broker/lawyer)
  • notification of payment theough Xchanging
  • money forwarded to the client
38
Q

Insurance act 2015 effect

A

information known by the broker is considered as known by the client unless it is confidential and obtained from another source

39
Q

electronic placing systems in the london market

A

PPL
Whitespace

40
Q

are brokers restricted interns of who they can use to insure risk?

A

any market including lloyds and company market

41
Q

inking a slip?

A

confirm acceptance of the risk on the slip

42
Q

Role of Xchanging Ins-sure Services

A

manages the central market risk of lloyds and IUA companies and facilitates the transfer of funds

43
Q

london premium advice notes

A

used to present the premium information in a standard format

44
Q

unique market reference
- definition

A

risks unique code

45
Q

marine insurance act 1906

A

brokers is responsible to the insurers for payment of the premium

46
Q

for changes to the risk
- how
- what happends

A
  • client contacts broker
  • may be conditional on more premium or changes to terms and conditions
  • broker send info to XIS for recording
47
Q

Xchanging Claims Service

A

maintains lloyds central claims database

interacted with through the electronic claims file, by brokers

48
Q

enterprise act 2016

A

gives insured up to a year o claim damages for late payments

accounts for
- type of insurance
- size and complexity of the claim
- any factors outside of the insurers control

49
Q

why insurers take part of a risk

A
  • size of risk and authority levels
  • balancing the portfolio
  • insurance broker input
  • new class of business
50
Q

subscription

A

risk is shared between insurers, each taking a fixed percentage

51
Q

leaders role in subscription market

A

review the risk
accept or not
decide the terms and conditions
quote premium

needs to be credible and supportable for the following market

52
Q

following market

A
  • writes their own contract with the insurer
  • if one secures more premium the others dont auto increase
  • different t&c creates different leaders (can lead to ghost leaders that never intended to lead or be involved in claims)
53
Q

leaders of a subscription market risk

A

overall = writes first
slip = 1st in the london market (lloyds or company)
bureau = 1st lloyds writer

54
Q

agreeing changes to risk

A

part 1 - leader only
part 2 - leaders and some agreement parties (any number)
part 3 - all underwriters

55
Q

single claims agreement party

A

agreed at placing that claims will be agreed by a single insurer only

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