The Structure of the London Market Flashcards
(39 cards)
Why do many choose to place risk in the London Market?
It is where many sizeable and complex risks from all over the world are placed.
What is the Council of Lloyd’s responsible for?
It is responsible for the management and supervision of the Lloyd’s market.
Created under the ‘Lloyd’s Act 1982’
Who is Lloyd’s regulated by?
Lloyd’s is a dual regulated institution.
Both the FCA & PRA.
How many people typically constitute the Lloyd’s Council?
15 members in total:
3 working
3 external
9 nominated
All members are approved by the FCA
What are syndicates?
Syndicates are the groups of private individuals or corporate investors who CARRY the risks.
A syndicate has a unique name/number; e.g. HIS/33.
Syndicates are made up of members or names.
How long does a syndicate exist for?
Accepts risks for 1 year.
But, the syndicates books remain open for another 24 months to allow premium to come in, allow claims to be notified, and resolve claims that have been notified.
What else are syndicates described as?
Annual ventures.
What does the size of a syndicate indicate?
It’s capacity to accept risks.
NOT its amount of employees.
What is a managing agent?
A managing agent appoints the underwriters who accept risks on the behalf of the syndicate.
Who are managing agents regulated by?
Both the FCA and PRA.
How many syndicates can managing agents manage the underwriting of?
Can manage the underwriting of one or more syndicates.
What is Capital?
Capital is the investment put into the market by the investors known as members/names.
Who are members/names?
Members/names invest into syndicates.
They provide the capital, and determine a syndicates capacity to accept risks.
What does ‘Reinsure to close’ (RITC) entail?
Syndicates will reinsure their outstanding liabilities into their ‘next year of account’.
Occurs when claims have still not yet been resolved or are notified late.
What do members agents do?
Advise members’ investment in the market.
Members’ choice of syndicate should reflect their attitude to risk.
E.g. a ‘risk seeking’ members may invest in syndicates writing classes of business that are more volatile like offshore energy.
Who is the company market regulated by?
Both the FCA & PRA.
Who is the trade body for the company market? What powers do they have?
The International Underwriting Association of London (IUA).
The IUA has NO regulatory power.
How do the Lloyd’s and Company markets interact differently with overseas regulators?
Lloyd’s: Liaises with overseas regulators on the behalf of the whole Lloyd’s market.
Company: Individual companies must liaise with overseas regulators themselves.
What formats can different insurers take in the company market?
- limited liability companies
- mutual indemnity associations
- mutual companies
- captive insurers
What is a limited liability company?
Is a private company whose owners are legally responsible for its debts and capital (most common).
E.g. AXA, Aviva, Churchill, Zurich.
What is a mutual indemnity association?
A group of individuals who collectively require the same insurance, who contribute to their own insurance pool for their individual risk.
E.g. P&I Club (aka: Protection and Indemnity Association)
P&I Clubs are comprised of shipowners and do this for marine liability.
What is a mutual company?
Is owned by its policyholders that generally serve a specific interest group. All profits made are either retained within the company or returned to the policyholder.
E.g. NFU.
What is a captive insurer?
Insurance companies who are solely insuring risks from sister companies.
What is the role of a broker?
Brokers are professional intermediaries who serve as the middle-man between the insured/insurer.
They act as the agent of the re/insured in both the placing and claims process.
