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Surplus Lines > Surplus Lines - Lloyds > Flashcards

Surplus Lines - Lloyds Flashcards

1
Q

What is Council of Lloyds?

A

Governing body of Society of Lloyds
Ultimate Responsibility for Management of Lloyds
Top of committee hierarchy

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2
Q

FSA Stands for?

A

Financial Services Authority

Regulatory Arm of UK Govt. overseeing Lloyds

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3
Q

Financial Services Authority Responsibilities

A

Regulating Lloyd’s (UK Govt Agency)

1) Direct supervision of Mananging Agents
2) Monitoring Capital Solvency

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4
Q

Function of Lloyd’s Corporation

A

Manage risk in market to protect Lloyd’s
Central Assets (Capital Requirements)
Brand
Reputation

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5
Q

Who does Council of Lloyds act through?

A

Franchise Board

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6
Q

Franchise Board

A

Surrogate for Council of Lloyds
Responsible for developing & directing the Lloyd’s franchise so that long term return to all capital providers is maximised.

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7
Q

Who appoints members of Franchise Board?

A

Council of Lloyds

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8
Q

Who exercises day to day powers & functions of the Council & Franchise Board?

A

1) Executive Team
2) CEO
3) Directors of Corporation

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9
Q

Distribution Channel consists of (3)?

A

1) Brokers
2) Coverholders
3) Service Companies

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10
Q

Who are Coverholders?

A

Companies authorised by a managing agent to enter into contracts of insurance or issue insurance docs on behalf of the members of a syndicate.

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11
Q

What is a Service Company?

A

1) An approved Lloyd’s coverholder (corporate version)

2) Wholly owned subsidiary of a managing agent or its holding company .

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12
Q

What do Coverholders do?

A

Place Risk

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13
Q

What do Service Companies do?

A

Place Risk

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14
Q

What is a Managing Agent?

A

Company(ies) that manage one or more Syndicates. Act on behalf of capital providers.

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15
Q

What does a Managing Agent do?

A

Employs underwriters & handles day to day running of Syndicate operations.

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16
Q

What is a Member?

A

Those who provide capital for syndicate’s underwriting (assumption of risk).

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17
Q

Who are Members?

A

individuals
major insurance groups
companies on London Stock Exchange
limited partnerships

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18
Q

What do Syndicates do?

A

Underwrite risk & terms

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19
Q

What is a Syndicate?

A

Group of Members willing to assume risk

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20
Q

Underwriting Room

A

Location at Lloyds where brokers / uw negotiate

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21
Q

What is referred to as the Chain of Security?

A

Lloyd’s Capital Structure

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22
Q

Lloyd’s Capital Structure (3 links)

A

1) Syndicate Level Assets (Policy Premiums)
2) Members Funds at Lloyds (FAL)
3) Central Assets

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23
Q

Which Lloyds funds are held in trust?

A

Syndicate assets & FAL (Members Funds at Lloyds

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24
Q

Are Syndicate & FAL assets mutual?

A

No, they are several. Each responsible for own losses.

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25
Q

Central Fund

A

Mutual assets held by Corporation to meet any member’s liabilities.

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26
Q

Mutual Assets

A

Assets available to meet any member’s liabilities.

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27
Q

Several Funds

A

Syndicate or Individual members funds held in trust but only available for individual members losses.

28
Q

MRC

A

Market Reform Contract

29
Q

Market Reform Contract

A

Standardized form used to replace an UW Slip

30
Q

Delegated Underwriting

A

UW authority delegated by Managing Agent to Coverholder

31
Q

MGA (Managing General Agent)

A

US term for Coverholder

32
Q

Binding Authority

A

Agreement setting out coverholder’s responsibilities and authority (issuing/ premium collection/claims handling)

33
Q

Lloyds “Transaction Train”

A

Policyholder - Retail Broker - Coverholder - Lloyds Broker - Managing Agents/Syndicates

34
Q

Role of Lloyds Broker

A

Negotiate binding authority for Coverholder (agent of Coverholder - point of contact between Managing Agent & Coverholder)

35
Q

Xchanging

A

Company that handles Lloyd’s regulatory, tax, premium & claims (Centalized processing)

36
Q

Duration of a Syndicate

A

One Year - Refomed annually

37
Q

Coverholder Levels of UW Authority

A

1) Full Authority
2) Pre-determined risk selection & rates
3) Prior Submit - managing agent underwrites/coverholder issues

38
Q

Callable Layer

A

Mutual Assets of Corporation available to all members

39
Q

AM Bests - Lloyds

A

A

40
Q

Fitch Ratings - Lloyds

A

A+

41
Q

Standard & Poors - Lloyds

A

A+

42
Q

Elements of the Undertaking

A

Coverholder contract with Lloyds - Separate from Binding Authority with Managing Agent:
General Conduct / UW Authority / Admin Arrangements incl premium / Dealing with Customers/Dealing with Lloyds Mkt / Local Compliance / Lloyds Powers / Material Change / Data Protection / 3rd Pty Contract Rights / Governing Law (England)

43
Q

Contract of Delegation

A

Binding Authority Agreement

44
Q

Parties to Contract of Delegation

A

Coverholder & Managing Agent

45
Q

Key Areas of Binding Authority Agreement

A
  1. Prudent Underwriting
  2. Authorised People (coverholder staff)
  3. Duration (standard 12 mos. / maximum 18 mos.)
  4. Contracts of Insurance (LOB)
  5. Selling Arrangements (local requirements)
  6. Renewing/Nonrenewing Contracts of Insurance (local requirements)
  7. Limit on Premium Incomce (Gross for Coverholder)
  8. Premium Collection
  9. Insurance Monies - Trust Acct
  10. Insurance documents standards
  11. Claims handling / settlement /funds (trust & pay)
  12. Reporting Responsibilities
  13. Cancellation - Provisions for binding auth cxl
  14. Lloyds name use
  15. Inspection of Records
  16. Jurisdiction - England
46
Q

Binding Authority Document Structure

A
  1. Standard Wording - Lloyds required content & clauses for bindign authority
  2. Schedule - Variable/specifics. Signed by contracting parties (coverholder /managing agent).
47
Q

Numbers on Binding Authority Schedule

A

“Dec” page incl.

  1. Agreement Number
  2. Unique Market Reference Number
48
Q

What is Contract Certainty?

A

Complete and final agreement of all terms between parties before binding authority incepts. Required for binding authority to be registered at Lloyds.

49
Q

Certificate

A

Sets out terms of insurance contract b/w policyholder & managing agent

50
Q

Who has ultimate responsibility for claims handling?

A

Managing Agent

51
Q

Agreed Value Policy

A

Insurance contract for a stated amount in the event of total loss without adjustment for depreciation or appreciation. (Property)

52
Q

Bailee

A

Person who holds property of another under contract or agreement to be returned or delivered elsewhere.

53
Q

Bailee fo Reward

A

Bailee paid for services.

54
Q

Capacity Auction

A

Procedure that allows Member to sell his participation in a syndicate for the following year to another Member by means of elecronic bidding at a specified time.

55
Q

Cash Call

A

Request for funds made by managing agent to members of a syndicate

56
Q

Combined Ratio

A

claims + expenses divided by premium for same time period

57
Q

Contructive Total Loss

A

Subject matter of policy abandonned to insurer because actual total loss appears unavoidable or cost to avoid total loss exceeds value

58
Q

Cover Note

A

Documetn issued by a broker pending policy issuance.

59
Q

Ex Gratia Payment

A

Paymen made by underwriter without admission of liability so as to maintain goodwill

60
Q

IBNR

A

Incurred but not reported - estimated losses based on past loss experience

61
Q

Indication

A

Non-binding statement by underwriter of the likely premium subject to additional information

62
Q

Lloyds Dollar Trust Funds

A

Funds maintained in the US for US $ denominted policies incepted after 08/01/1995. Premium trust fund.

63
Q

What is Lloyds Policy Signing Office, Ltd. part of?

A

Xchanging - no longer part of Corporation

64
Q

Retrocession

A

Reinsurance of a reinsurer by another reinsurer

65
Q

Placing Slip

A

Summary of terms created by broker presnted by the broker to uw for amendment/agreement & quotation or indication.

66
Q

Signing Slip

A

Document created by broker after quotation accepted to process premiums under contract outlined in palcing slip. Must have uw stamps, signed lines & preferences.

Surplus Lines (5 decks)

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