Structure Of The Insurance Market

Question 1

Structure of the Insurance Market:

• Buyers
• Sellers
• Aggregators
• Intermediaries
• Reinsurers

Answer 1

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Question 2

BUYERS

Answer 2

• Private Individuals e.g. motor, property, household
• Public Bodies e.g. local councils, schools
• Partnerships e.g. where there maybe professional negligence
• Companies e.g. multinational corporations, self-employed trader
• Associations/Clubs e.g. groups, schemes

Question 3

INSURERS

Must be authorised by the PRA (Prudential Regulation Authority)

Answer 3

• Proprietary Companies: companies that are owned by the shareholders who contribute to the companies capital of the firm. They are limited liability companies (a shareholders liability is limited to the nominal value of its shares) & registered under Companies Act 1985.
• Societas Europaeas (SE): An SE can register in any state of the EU without having to liquidate the company. Allows cross-border merging, saves new licenses and and international transfers to operate. This replaces subsidiary branches (this allows an SE can regulate at the level of a parent company)

Mutual Companies: Policyholders own the company - share the company at lower premiums, liable for an losses.

Mutual Indemnity Associations: Policyholders owned by the company. Usually marine insurance , where Protection and Indemnity Associations insure certain aspects of marine hull liability

Captive Insurance Companies: Properly authorised insurance company. Tax efficient method of transferring risks. Become more common amongst large international companies

Protected Cell Companies (PCC): A corporate structure in which a single legal entity is compromised of separate other cells of separate assets and liabilities. The board of directors manage the companies affairs. Operates in two parts: 1. Non cellular part (the core) 2. An unlimited number of cells. Articles are used to encourage the directors to create new cells by resolving current cells

Question 4

Type of Insurers (by function)

Answer 4

COMPOSITE INSURER COMPANIES: issue policies for a range of classes of businesses. They represent a major part of the market

SPECIALIST INSURER COMPANIES: issue policies for one class of business

TAKAFUL INSURANCE COMPANIES: any risk or profit transaction should be shared between the participants. It is based on a Sharia Law within an Islamic Financial Services Industry. It embraces the Islamic principles of: cooperation, shared responsibility, joint indemnity, common interest, solidarity.

THE STATE: in the uk, acts as an insurer in social services and pension provision, sometimes terrorism risks.