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LM2 > LO8: Understanding the way that business is conducted in the London Market > Flashcards

LO8: Understanding the way that business is conducted in the London Market Flashcards

1
Q

quotation definition

A

indication of the T&Cs that an insurer is suggesting for the risk

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2
Q

written line

A

line the insurer wants to write

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3
Q

broker order

A

percentage of the risk they have been asked to place

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4
Q

when insurer is on risk?

A

inception date

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5
Q

signing down

A

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

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6
Q

downgrade clause

A

ability for the insured to remove an insurer based on the occurrence of a certain circumstance, like downgraded agency rating

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7
Q

cool off period

A

14 day period were consumer insurance can be cancelled

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8
Q

termination by fulfilment

A

total loss of the subject matter of insurance

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9
Q

what allows unexpected termination

A

insurance act 2015

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10
Q

who must know for an insured to know
- insurance act 2015

A

senior management
broker
those in charge of insurance

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11
Q

what ought to be known by the insured

A

uncovered by a reasonable search

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12
Q

fraudulent devices definition

A

valid claim is exaggerated by fraudulent means

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13
Q

reasons an insurer will (not) want to renew

A

not:
- loss causing client
- exiting lob

will:
- cheaper to renew than rewrite
- more stale portfolio, making stats more useful

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14
Q

why ‘warranted no known or reported losses’?

A

WNKORL

ensures underwriter doesnt pay any losses from before they wrote their line

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15
Q

proposal form applications
- what?
- what lines?

A

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

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16
Q

mrc roles

A
  • broker uses it to summarize risk
  • underwriter signs onto risk
  • copy sent to client

product of standardization

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17
Q

mrc types

A

open market
lineslip
binder

bottom 2 dont have the risk section of OM MRC, replaced by details of the delegation

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18
Q

open market

A

risks placed individually, broker visits each underwriter separately

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19
Q

lineslip

A

group arranged by broker

agree that if one or two agree to risk the rest attach on

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20
Q

binder

A

external third party has delegated underwriting authority within parameters

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21
Q

open market mrc key sections

A

risk detials
information (reference to surveys/reports)
security details
subscription agreement
fiscal and regulatory
broker renumeration and deductions

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22
Q

mrc risk detail section

A
  • 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
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23
Q

mrc security details

A
  • 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
24
Q

‘line to stand’ meaning

A

written line must equal signed line

25
Q

mrc subscription agreement

A
  • 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
26
Q

mrc fiscal and regulatory

A
  • 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)
27
Q

mrc broker renumeration

A
  • fee payable by the client
  • brokerage amount
  • any other deductions from premium (eg. administration fees)
28
Q

core data record
- what is?
- what for?
- number of fields

A

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

29
Q

endorsement

A

used to document changes to the risk for underwriters

30
Q

aim of general underwriters agreement

A
  • 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
31
Q

gua class of business schedules

A

nonmarine
marine cargo (requires notification of followers on gua stamp)
political risk

32
Q

parts of gua schedule

A

part 1 = slip lead only
part 2 = slip lead and agreement parties
part 3 = all underwriters

33
Q

gua part 1 changes

A
  • 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
34
Q

gua part 2 changes

A
  • not in part 1 or part 3
35
Q

gua part 3 changes

A
  • changes to geographical scope
  • policy extensions greater than 1 month/ 30 days
  • changes to jurisdiction of the contract
  • backdating of policy period
36
Q

mrce sections

A
  • risk and endorsement identification
  • contract changes
  • information
  • agreement
  • contract administration and advisory
37
Q

mrce risk and endorsement identification

A

refers to umr being changed and any other endorsements

38
Q

mrce contract changes

A

restates mrc headings where changes are being made along with when they come into effect

39
Q

mrce agreement

A

shows who has to agree the change and that they have agreed

40
Q

mrce contract administration or advisory

A

any changes to mrc subscription agreement, fiscal and regularoty or broker renumeration is shown here

41
Q

debt note

A

used to inform client of any premiums due

42
Q

london premium advice note (LPAN)

A

for insurers using the central settlement system

  • submitted to Xchanging using accounting and settlement system
43
Q

standard conditions

A

insured complying with terms and telling underwriters about any risks

44
Q

condition precedent to contract

A

must be satisfied for the contract to stand

45
Q

condition precedent to liability

A

must be satisfied for claim to be valid

46
Q

warranty

A

something the insured will (not) do or fact that is/isnt true

47
Q

typical types of warranties

A

reduce risk of
- particular type of loss
- loss in a location
- loss at a particular time

48
Q

available wording conventions

A

london standard wordings
international standards organizations
london market associations
non-marine association
aviation market

49
Q

wording added to overseas wordings to include

A
  • english law and practice
  • insurable interest clause
  • sue and labour clause
  • war and nuclear exclusion
50
Q

service company

A
  • operate in the lloyds market
  • set up by managing agents in various locations
  • write on behalf of the syndicate
  • rules of lloyds still apply
51
Q

branch offices

A

set up by member of the company market to let them write business in a new country

52
Q

lloyds insurance company sa

A

lloyds brussels, wholly owned subsidiary for EEA and Monaco

53
Q

contract certainty
- how?

A

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

54
Q

“contract documentation provided promptly after”?

A

30 days commercial
7 days consumer

55
Q
A

LM2 (5 decks)

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