LO8: Understanding the way that business is conducted in the London Market Flashcards
quotation definition
indication of the T&Cs that an insurer is suggesting for the risk
written line
line the insurer wants to write
broker order
percentage of the risk they have been asked to place
when insurer is on risk?
inception date
signing down
process by which risk share is reduced to 100%
results in the signed line
reduction without permission permissible, but cannot increase insurers risk without permission
downgrade clause
ability for the insured to remove an insurer based on the occurrence of a certain circumstance, like downgraded agency rating
cool off period
14 day period were consumer insurance can be cancelled
termination by fulfilment
total loss of the subject matter of insurance
what allows unexpected termination
insurance act 2015
who must know for an insured to know
- insurance act 2015
senior management
broker
those in charge of insurance
what ought to be known by the insured
uncovered by a reasonable search
fraudulent devices definition
valid claim is exaggerated by fraudulent means
reasons an insurer will (not) want to renew
not:
- loss causing client
- exiting lob
will:
- cheaper to renew than rewrite
- more stale portfolio, making stats more useful
why ‘warranted no known or reported losses’?
WNKORL
ensures underwriter doesnt pay any losses from before they wrote their line
proposal form applications
- what?
- what lines?
yacht, treats it more as a personal line thus more responsibility is on the insurer
PI
form is crafted by insurer or broker, more personalisation
mrc roles
- broker uses it to summarize risk
- underwriter signs onto risk
- copy sent to client
product of standardization
mrc types
open market
lineslip
binder
bottom 2 dont have the risk section of OM MRC, replaced by details of the delegation
open market
risks placed individually, broker visits each underwriter separately
lineslip
group arranged by broker
agree that if one or two agree to risk the rest attach on
binder
external third party has delegated underwriting authority within parameters
open market mrc key sections
risk detials
information (reference to surveys/reports)
security details
subscription agreement
fiscal and regulatory
broker renumeration and deductions
mrc risk detail section
- unique market reference
- type (of insurance)
- insured (name)
- policy period
- interest (whats being insured)
- limits of liability
- insureds retention (includes excess/deductibles)
- situation (territorial limites)
- conditions
- loss payee
- subjectivities (provisions to insurer before they come onto risk like a survey)
- laws and jurisdiction
- premium
- premium payment terms
- tax payable by insureds and administered by insurers
- recording, transmitting and storing information
- insurer contract documentation
- notice of cancellation of provisions
mrc security details
- insurers liability (lays out the risk of each insurer on proportional)
- order
- basis of written line (percentage of whole. percentage of order or part of whole)
- basis of signed lines (no difference is expected for open market business)
- signing provisions (how signing down is done)
- written lines
‘line to stand’ meaning
written line must equal signed line
mrc subscription agreement
- slip lead (usually in the London market)
- bureau lead (member of IUA, can be the slip lead)
- basis of agreement to contract changes (General Underwriters Agreement)
- basis of claims agreement/claims agreement parties
- claims administration
- delegated claims agreement (including to Xchanging)
- experts fee collection (broker may do it all)
- settlement due date (when premiums should be paid by)
- bureaux arrangementsr
mrc fiscal and regulatory
- tax payable by insurers
- country of origin (insured)
- overseas broker
- regulatory risk location (eg. insured domicile, risks physical location, where mobile asset is registered)
- surplus lines broker
- state of filing
- us classification (payments in USD or country of origin is US)
- allocation of premium to coding (premium related to each LOB)
- allocation of premium to year accounts (for policy periods > 18 months)
- regulatory client classification (large risks include marine and aviation)
mrc broker renumeration
- fee payable by the client
- brokerage amount
- any other deductions from premium (eg. administration fees)
core data record
- what is?
- what for?
- number of fields
provides key data captured at the point of bind to/for:
- premium validation
- claim matching at first loss notification
- tax validation and reporting (lloyds only)
- regulatory validation and reporting (lloyds only)
37 mandatory, 180 conditional fields
endorsement
used to document changes to the risk for underwriters
aim of general underwriters agreement
- create agreement of who will deal with contract changes between underwriters on a specific mrc
- clarify extent of authority
- enable flexibilty for classes of business
- ensure all underwriters will be advised of changes
gua class of business schedules
nonmarine
marine cargo (requires notification of followers on gua stamp)
political risk
parts of gua schedule
part 1 = slip lead only
part 2 = slip lead and agreement parties
part 3 = all underwriters
gua part 1 changes
- any obvious typos
- anything that reduces monetary exposure
- restrictions in coverage
- return premiums if provided for in the slip
- agreement of wording if leader agreement only is stated in the slip
gua part 2 changes
- not in part 1 or part 3
gua part 3 changes
- changes to geographical scope
- policy extensions greater than 1 month/ 30 days
- changes to jurisdiction of the contract
- backdating of policy period
mrce sections
- risk and endorsement identification
- contract changes
- information
- agreement
- contract administration and advisory
mrce risk and endorsement identification
refers to umr being changed and any other endorsements
mrce contract changes
restates mrc headings where changes are being made along with when they come into effect
mrce agreement
shows who has to agree the change and that they have agreed
mrce contract administration or advisory
any changes to mrc subscription agreement, fiscal and regularoty or broker renumeration is shown here
debt note
used to inform client of any premiums due
london premium advice note (LPAN)
for insurers using the central settlement system
- submitted to Xchanging using accounting and settlement system
standard conditions
insured complying with terms and telling underwriters about any risks
condition precedent to contract
must be satisfied for the contract to stand
condition precedent to liability
must be satisfied for claim to be valid
warranty
something the insured will (not) do or fact that is/isnt true
typical types of warranties
reduce risk of
- particular type of loss
- loss in a location
- loss at a particular time
available wording conventions
london standard wordings
international standards organizations
london market associations
non-marine association
aviation market
wording added to overseas wordings to include
- english law and practice
- insurable interest clause
- sue and labour clause
- war and nuclear exclusion
service company
- operate in the lloyds market
- set up by managing agents in various locations
- write on behalf of the syndicate
- rules of lloyds still apply
branch offices
set up by member of the company market to let them write business in a new country
lloyds insurance company sa
lloyds brussels, wholly owned subsidiary for EEA and Monaco
contract certainty
- how?
by the complete and final agreement of all terms between the insurer and insured at the time that they enter into the contract with contract documentation provided promptly after
“contract documentation provided promptly after”?
30 days commercial
7 days consumer
