LO6: Understand insurance intermediation in the London Market

Question 1

agency by necessity

Answer 1

emergency situation where someone has to make a decision an noone with the authority is present

Question 2

agent duties

Answer 2

• 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

Question 3

principal responces to agent acting outside of their authority

Answer 3

• 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

Question 4

broker duty of care

Answer 4

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

Question 5

broker breaches of duty of care

Answer 5

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

Question 6

single tied broker

Answer 6

works for insurer, not in london market
sells >1 product from one insurerm

usually high street retailer

Question 7

multi-tied agent

Answer 7

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

Question 8

independent intermediary

Answer 8

traditional london market broker

tied to no insurer so can give independent advice

Question 9

surplus lines broker

Answer 9

must be used when writting unadmitted in the us

Question 10

open market correspondent

Answer 10

no delegated authority (not an approved coverholder) but introduces business to lloyds directly or through a lloyds broker on an open market basis

Question 11

broker submissions to xchanging

Answer 11

mrc
london premium advice note = premium and tax info

Question 12

broker requests funds from the client

Answer 12

• get it in good time to pay insurers in time
• advice/meet specified premium payment demands
• advice on risk of cover cancellation

Question 13

account and settlement system

Answer 13

used to submit info to xchanging

Question 14

insurers marker repository (imr)

Answer 14

central market document repository

risks identified using a signing number and date

Question 15

insurers ask for expert reports that will be shared with the client through

Answer 15

broker

Question 16

terms of business agreement is for between …

Answer 16

broker and various parties
- can include producing broker

Question 17

who made model TOBAs

Answer 17

lma
iua
liiba

Question 18

terms of business agreement with insurer

Answer 18

• 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

Question 19

terms of business agreement with client

Answer 19

• 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

Question 20

broker flat fee

Answer 20

payable by client (need to be notified before the fee is incurred or of how the fee will be calculated)

Question 21

broker commission/brokerage

Answer 21

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

Question 22

collecting commision

Answer 22

on claims (usually 1% so insurer pays 101%)

Question 23

other commissions

Answer 23

binding commission
technical advise, like engineers

Question 24

insurance distribution directive (idd)
- applies to

Answer 24

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)

Question 25

idd principles

Answer 25

• act in best interest of the customer
• info they provide must be clear and fair
• must dicslose nature and basis (fee/brokerage) of renumeration

Question 26

client assests rules
- from?
- what?

Answer 26

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

Question 27

types of segregated accounts

Answer 27

statutory trust account
nonstatutory trust account

Question 28

statutory trust account

Answer 28

cant fund payments out
only for client money recieved

Question 29

nonstatutory trust account

Answer 29

• fund payments out
• trust account by declaration not law
• broker can extend credit to the client

Question 30

when should brokers pay clients

Answer 30

day after the funds are received

Question 31

main elements of data protection act 2018

Answer 31

• 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

Question 32

uk general data protection regulation applies to (companies and data)

Answer 32

processors (firms)
controllers

applies to personal data of an identified living individual

Question 33

uk gdpr lawful processing

Answer 33

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

Question 34

uk gdpr rights

Answer 34

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

Question 35

accountability
- legally required

Answer 35

privacy impact assessments
privacy by design

Question 36

who do organisations report breaches to

Answer 36

information commissioners office
individuals affectex