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LM1 > Main classes written in London Market > Flashcards

Main classes written in London Market Flashcards

1
Q

Define reinsurance

A

Insuring those risks that an insurance company has taken on.

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2
Q

What are the benefits of reinsurance

A

Even out peaks & troughs (consistency)
Increase financial capacity (This is monitored by regulators)
Risk transfer
Spreads costs
Protect Insurers portfolio of similar written risks
Allows Insurer to enter new Business class & Territory

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3
Q

Main centres for Reinsurance

A

Lloyds
IUA (International Underwriting Association)

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4
Q

Who are the main buyers of Reinsurance

A

Insurers
Reinsurers
Captive Insurers (Takes risks only from parent company)
Mutuals (Like minded groups of insurers forming pool)

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5
Q

Define the names of the players in Reinsurance

A

Cedant - Original insurer who passes risk to reinsurer
Retrocedent - Reinsurer buying reinsurance for themselves
Retrocessionaire - Reinsurer accepting reinsurance from another reinsurer

Cession - Risk that is passed to Reinsurer
Retrocession - Reinsurance risk to another reinsurer

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6
Q

Difference between Non-Prop & Proportional reinsurance

A

Prop = Risk/loss is shared proportionally
- Horizontal protection

Non = Risk only transfers to reinsurer past certain threshold (premium set like normal insurance)
- Vertical protection

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7
Q

What is reinstatement (Reinsurance)

A

Where the reinsurance layer has been exhausted, it is provided again

Reinstatement Premium is paid for this

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8
Q

What are the two main types of reinsurance

A

Proportional

Non-Proportional

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9
Q

Treaty reinsurance

A

Cedant transfers (cedes) proportion of entire risk exposure to reinsurer

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10
Q

Who are the main sellers of reinsurance

A

Dedicated Reinsurers (specialists)
Lloyds syndicate
Insurance companies who do both

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11
Q

What risks do marine insurers write that others don’t

A

Honour policies (where insurable interest is unclear)

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12
Q

What is the common features of hull (or similar) insurance

A

Damage to the insured ship (known as - Short Tail or First Party)

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13
Q

Builders Risk Insurance

A

Combined physical & liability cover for building of ship
(Either for Owner or Owner & Build Yard)

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14
Q

Types of Marine Insurance

A

Marine Hull / Yacht
Loss of earnings
Marine Cargo
Marine Liability
Marine War & Strike
Misc (PRI & Offshore Energy)

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15
Q

Loss of Earnings Insurance (Marine)

A

Covers loss of earnings when ship is damaged

Waiting period rather than financial excess/deductible.

Common - 150 days indemnity, 14 days waiting period.

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16
Q

Three main types of Marine Insurance

A
  1. Loss of income
  2. Liabilities incurred to third party
  3. Damage to ship or goods (Cargo)
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17
Q

Types of Proportional Reinsurance

A

Quota Share - Share based on percentage

Surplus Share - Over certain threshold

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18
Q

Difference between Cargo & Goods in Transit Insurance

A

Cargo = Damage insurance for the goods when being moved around

Goods in Transit = Liability for person / org moving goods

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19
Q

Cargo insurance

A

Covers physical damage to goods when they are being transported

NOT liability to third party for this damage

NOT storage (This is combined in Stock Throughput Insurance)

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20
Q

What other types of cover are classed as ‘Marine Cargo’

A

Cargo - Physical loss or damage cover of goods when transported

Stock throughput Insurance - Combined cargo transit & storage policy

Jewellers - Combined property and liability cover for jewellery industry

Specie - Covers physical loss & damage for special high value items (Metals, gemstones, valuable docs)

Fine Art - Physical loss & damage cover for paintings, sculptures and ‘installations’. Covers repair and ‘depreciation’ in value

Satellite - Covers the physical loss or damage of satellite when moving pre launch

Cash in transit - Physical loss or damage to money when moving

Goods in transit** - Liability of carrier when moving cargo

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21
Q

Define War & Strike in insurance context

A

Strike = A concerted stoppage of work

War = War and civil war types risks, including captures and seizures

^^ Used temporarily when marine / cargo enters high conflict zone

22
Q

What is included in Marine Hull

A

Short Tail / First Party
Builders Risk

23
Q

Common theme of Marine Cargo

A

Physical loss or damage

Except - Goods in Transit (liability)

24
Q

Marine Liability Insurance

A

Covers legal liability for damage or injury to third party, caused by owners vessel or ship

(Type of Long Tail Insurance - Long time between inception and claim)

Wider coverage than Collison Liability in Marine Hull cover.

25
Q

What is covered in Marine Liability Insurance

A

Injury to crew or visitors
Damage to property (Not other ships) - Ports
Wreckage
Covers damage to vessel when rented / chartered
Cargo damage - Liability regarding this
Pollution

26
Q

Who needs Marine Liability Insurance

A

Ship owners
People Chartering ships
Port Authorities
Marina Owners
Shipbuilders / repairers

27
Q

What is PRI

A

Political Risk Insurance - Cover for actions/inactions/restrictions imposed by HOSTILE or UNCONSTITUTIONAL governments in 2nd or 3rd world countries that impacts goods or services

28
Q

Offshore Energy Insurance

A

Upstream = The process of extraction of Oil & Gas from the ground

Offshore Energy covers this process when it occurs under seabed. (3 stages)

29
Q

Three stages of Upstream energy

A
  1. Exploration (Physical & Liability)
  2. Construction (Physical & Liability)
  3. Operational (Physical Risk, Damage, War & Liability)
30
Q

What are the 9 insurances that fall into ‘Non-Marine’

A

Property
Business Interruption
Casualty
Bloodstock & Livestock
Product
IP
Kidnap & Ransome
Contingency
Personal Accident

31
Q

What lines fall under Property Insurance (Wider heading)

A

Property
Pecuniary
Construction
Onshore Energy
Cyber

32
Q

What buildings are covered under property Insurance

A

Office
Industrial
Public
Rental
Agricultural
Domestic

33
Q

What is different about a property policy compared to marine

A

Includes option of reinstatement as method of indemnification

34
Q

What is Property Insurance? (Sub)

A

Physical Loss Damage insurance for range of buildings

(Offices, Industrial, Rentals, Public, Agricultural, Domestic)

35
Q

What are the other types of Property (Building) Insurance

A

Stock
Glass
Theft
Goods in Transit

36
Q

What is covered under traditional Property Insurance for Industrial building

A

(Factories & Warehouses)

Machinery
Fixtures & Fittings
Raw Materials
Final product before shipment

37
Q

Pecuniary Insurances

A

Cover monetary loss not physical damage

Two types:
1. Money Insurance - Risks of money and valuable docs
(tickets & vouchers)

  1. Fidelity Insurance - Covers fraudulent acts during policy period
    (Stealing employee)
  2. Business Interruption
38
Q

Construction Insurance

A

Each party should have their own insurance, but central one is important to avoid gaps in coverage

Contractors All Risks (CAR) - Purchased by lead for all subs

Erection All Risks (EAR) - Those who put up machinery or steel structures

^Both cover Property Damage and Bodily Injury to Third Parties ^

39
Q

What types of liability must be covered under Construction Insurance

A

Property Damage
Bodily injury

(To third parties)

40
Q

Onshore Energy

A

Covers risks after energy is found and extracted from earth

Midstream Insurance - Pipelines
Downstream - Refining & Processing

Also includes Mining, Renewable Energy and Power Generations

41
Q

Cyber Insurance and issues faced?

A

Covers losses related to use of networks to access online systems and info

E&O related to Cyber risks
Network Security
Privacy Breaches

42
Q

What is covered in Cyber Insurance

A

BI
Rep Protection
Ransom payments
Practical Support
Physical Damage
Regulatory Investigations
D&O Liability
Contingent risks

43
Q

Business Interruption Insurance (Non-Marine)

A

Usually replaces physical loss or damage to INSURED PROPERTY causing loss of income
(Waiting period applies)

Contingent Business Interruption Insurance = When BI is not caused by own property

44
Q

What are subtypes of Property BI

A

Advanced Loss of Profits (Damage)

Delay in Start Ups (Non arrival)

  • Both cover losses of profit caused by delays

(Marine & Non-marine)

45
Q

Difference between Property Insurance and Liability

A

Property = Physical Loss & Damage cover

Liability = Covers legal liabilities to third parties

46
Q

What Liabilities are covered under Casualty

A

Employers - Covers employers for claims made by employees who are injured at work

Public - Covers loss or damage to public by premises or employee

Professional - Covers claims of professional negligence or bad advice which caused loss or damage (Medical Malpractice)

Motor - Compulsory

General - Wider, non specific liability cover (Advertising Liability)

Product - Covers insured when their product causes damage to someone (Anyone in the supply chain)

47
Q

Advertising Liability

A

Type of liability covered under General Liability

Covers slander damage to third parties from untrue writing about them

48
Q

Bloodstock & Livestock Insurance

A

Insurance for animals used for business

Bloodstock - Horses (Show horses, race horses)
Livestock - Covers most other animals

Main risk = Death or illness, OR infertility

49
Q

Contingency Insurance (Non-marine)

A

Specific group of random, fortuitus event

50
Q

What are the insurances covered under Contingency

A

Event Cancellation (Illness causing cancellation)
Weather-related Insurances (Causing delay or cancellation)
Prize Indemnity (Covers unlikely prizes)
Death & Disgrace (Covers reshooting costs for advertising campaigns due to inadequate or death to original person)
Over-Redemption (Offers and promotion costs on items)

51
Q

Kidnap & Ransome

A

Ransome Payment
Medical expenses when released
Negotiation team

Written in marine for pirate seizure of goods or boats.

LM1 (3 decks)

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