The Insurance Market

Question 1

5 components of the insurance market

Answer 1

• buyers
• Insurers
• Intermediaries
• Comparison Websites
• Reinsurers

Question 2

Types of insurer by ownership

Answer 2

• proprietary companies
  *mutual companies
  *mutual indemnity companies
  *captive insurers

Question 3

Proprietary Companies

Answer 3

Owned by shareholders - have limited liability

Question 4

Mutual Companies

Answer 4

Owned by policy holders - benefit from profits by lower premiums

Question 5

Mutual Indemnity Associations

Answer 5

self-managed pools if insurers - owned by policy holders

Question 6

Captive Insurers

Answer 6

Insurance company established by its parent company providing insurance for the parent company - protected cell companies (PPC) type of captive insurer

Question 7

Types of insurer defined by function

Answer 7

composite companies
specialist insurers

Question 8

composite companies

Answer 8

accept several types of business and represent the major part of the company market

Question 9

specialist insurers

Answer 9

issue policies for only one class of business

Question 10

takaful insurance

Answer 10

works on the principal that any transaction risk and profit should be shared between the participants - takaful insurance products need to be approved by Islamic Scholars

Question 11

managing agents

Answer 11

Lloyds syndicates outsource the day-to-day running to a managing agent - they are dual-regulated ie. have to be approved by the FCA and the PRA

Question 12

contract certainty

Answer 12

contract certainty is achieved by the complete and final agreement of all terms between the insured and insurers by the time they enter into the contract with contract documentation provided promptly thereafter

Question 13

Intermediaries

Answer 13

An agent that brings the insured and insurer together - must be FCA regulated or exempt ie AR or IAR

Question 14

Appointed Representative (AR)

Answer 14

Appointed by an authorised person - can act for more than one principal

Question 15

Authorised person

Answer 15

Individual or firm authorised by the FCA to engage in regulated activities

Question 16

Introducer appointed representatives q

Answer 16

limited to effecting introductions and distributing non-real time financial promotions

Question 17

Lloyds insurance broker

Answer 17

most follow requirements of lloyds and FCA for an authorised person

Question 18

Services provided by intermediaries

Answer 18

Act on behalf of client

Question 19

Direct insurance

Answer 19

from insurer to client eg through websites

Question 20

Indirect insurance

Answer 20

intermediaries paid by the insurer to promote products on their behalf

Question 21

Delegated Authority

Answer 21

many insurers delegate authority to intermediaries to act on their behalf - the intermediary is authorised to issue cover within defined limits - improves the flow of business

Question 22

Bancassurance

Answer 22

insurance products are sold to the banks customers through the banks branches

Question 23

Reinsurance

Answer 23

May be on an individual risk basis or an event basis or on a portfolio basis

Question 24

Association of British Insurers (ABI)

Answer 24

gathers market stats, frames codes and creates awareness of the role of insurance

Question 25

International Underwriting Association (IUA)

Answer 25

Represents international and wholesale insurance and reinsurance companies

Question 26

British Insurance Brokers Association (BIBA)

Answer 26

non -statutory trade association for insurance intermediaries

Question 27

London Market Regional Committee (LMRC)

Answer 27

maintains a lobbying role and represents the sector to the FCA, Europe, the UK govt and other stakeholders

Question 28

London and International Broker Association (LIIBA)

Answer 28

independent trade body

Question 29

Llpyds Market Association (LMA)

Answer 29

provides information, representation and technical services to underwriting businesses in Lloyds

Question 30

Managing General Agents Association (MGAA)

Answer 30

gives the insurance industry a better understanding of what an MGA is and what they contribute to the industry

Question 31

Chartered Insurance Institute (CII)

Answer 31

Forefront of insurance education and professionalism

Question 32

Chartered Institute of Loss Adjustors (CILA)

Answer 32

Members must preserve impartiality - CILA has its own complaints handling mechanism

Question 33

Institute and Faculty of Actuaries (IFoA)

Answer 33

provides manuals of actuarial practice and issue guidance notes in particular areas

Question 34

Institute of Risk Management (IRM)

Answer 34

develops new educational programmes

Question 35

Association of Insurance and Risk Managers in Insurance and Commerce (Airmic)

Answer 35

members include company secretaries, finance directors, internal audit and risk and insurance managers

Question 36

Insurtech UK

Answer 36

represents insuretech companies

Question 37

Motor Insurance Bureau (MIB)

Answer 37

aims to: *reduce level and impact of uninsured drivers *provide data to specialist claims services

Question 38

Insurance Premium Tax

Answer 38

*standard rate of 12% *20% for travel and some vehicles and domestic and electrical appliances