LO6: Understand insurance intermediation in the London Market Flashcards
agency by necessity
emergency situation where someone has to make a decision an noone with the authority is present
agent duties
- follow instructions
- act in good faith towards their principals
- not to sub-delegate without permission
- account for funds
- act with all due care and skill
principal responces to agent acting outside of their authority
- ratify
- ratify and claim damages
- refuse to ratify, open up the agent to third party claims
shouldnt give the impression that the agent has more power than they acc do
broker duty of care
to insurer and insured, obligated under the law of tort
- to behave in accordance with the standards of a reasonably able and competent broker in the relevant area of the market
broker breaches of duty of care
not:
- ensuring insurance is placed with suitable insurers
- ensuring insurance is placed on suitable terms and conditions
- ensuring they understood client instructions
- explaining terms (warranties) and their effect
can lead to professional negligence claims
single tied broker
works for insurer, not in london market
sells >1 product from one insurerm
usually high street retailer
multi-tied agent
works for insurer, not in london market
sells one product per insurer, with 1 insurer on each class (car or house)
usually high street retailer
independent intermediary
traditional london market broker
tied to no insurer so can give independent advice
surplus lines broker
must be used when writting unadmitted in the us
open market correspondent
no delegated authority (not an approved coverholder) but introduces business to lloyds directly or through a lloyds broker on an open market basis
broker submissions to xchanging
mrc
london premium advice note = premium and tax info
broker requests funds from the client
- get it in good time to pay insurers in time
- advice/meet specified premium payment demands
- advice on risk of cover cancellation
account and settlement system
used to submit info to xchanging
insurers marker repository (imr)
central market document repository
risks identified using a signing number and date
insurers ask for expert reports that will be shared with the client through
broker
terms of business agreement is for between …
broker and various parties
- can include producing broker
who made model TOBAs
lma
iua
liiba
terms of business agreement with insurer
- regulatory status (allowed to broker)
- broker authority (risk transfer = money paid to insurer is deemed paid to the insurer)
- renumeration
- holding money/taxes (account to insurer on taxes paid on their behalf)
- compliance (contract certainty and financial crime avoidance)
- ownership and access to data records
- laws and jurisdiction
- conflict management
- confidentiality
terms of business agreement with client
- clients identity
- claims notification (broker guidance)
- disclosure
- how brokers are paid (brokerage = premium % is a commission)
- how monies are held
- data protection
- complaint (process)
- dispute resolution
broker flat fee
payable by client (need to be notified before the fee is incurred or of how the fee will be calculated)
broker commission/brokerage
paid by insurer
held back by broker who gives on the net premium
broker must tell a commercial client what its receiving if asked but doesnt have to volunteer the info
collecting commision
on claims (usually 1% so insurer pays 101%)
other commissions
binding commission
technical advise, like engineers
insurance distribution directive (idd)
- applies to
applies to:
- sellers of products
- persons jobs to assist in insurance contract admin and performance
- ancillary insurance intermediaries (lighter touch and exclusion if insurance is complementary to the goods and services with premium <600 euro)
idd principles
- act in best interest of the customer
- info they provide must be clear and fair
- must dicslose nature and basis (fee/brokerage) of renumeration
client assests rules
- from?
- what?
from fca
says broker must have adequate protection for the client assets (premium or claim funds) they are responsible for
should be kept in a separate account so it cant be used to pay firm debt if it fails
types of segregated accounts
statutory trust account
nonstatutory trust account
statutory trust account
cant fund payments out
only for client money recieved
nonstatutory trust account
- fund payments out
- trust account by declaration not law
- broker can extend credit to the client
when should brokers pay clients
day after the funds are received
main elements of data protection act 2018
- ensuring sensitive data can still be processed
- restricting rights to access or delete data
- setting the age where parental consent isnt needed to process data online
- increase powers of the information commissioners office
uk general data protection regulation applies to (companies and data)
processors (firms)
controllers
applies to personal data of an identified living individual
uk gdpr lawful processing
consent
contract
legal obligation (needed to comply with law)
vital interests (protect someones life)
public task (public interest)
legitimate interest (firms or third party)
focus is on accountability
uk gdpr rights
right to
- be informed
- of access (by submitting access request)
- rectification
- erasure (not absolute)
- restrict processing
- data portability
- object
- in relation to automated decision making/profiling
accountability
- legally required
privacy impact assessments
privacy by design
who do organisations report breaches to
information commissioners office
individuals affectex
