Chapter 9 - Delegated Underwriting

Question 1

Who can underwriting authority be delegated to?

Answer 1

• another or consortium of insurers
• broker
• another entity all together

Question 2

What is a consortium?

Answer 2

A group of insurers who have formed an agreement to accept risks together in a set proportion

Question 3

How long is a consortium set up for?

Answer 3

A year

Question 4

What are the benefits of a consortium?

Answer 4

• placing process quicker and more efficient for broker
• consortium leader gets a commision for the trouble
• followers access to business without seeing broker

Question 5

What is the difference between a line slip and a consortium?

Answer 5

Line slip is brought together by the broker

Question 6

What are the benefits of a line slip / facility?

Answer 6

• efficient for broker when placing risks that fall withi criteria
• insurers gain access to business without having to agree the risks individually

Question 7

What is a declaration?

Answer 7

individual risk presented for agreement by broker so it can be attached to the line slip

Question 8

Why would an insurer delegate underwriting?

Answer 8

• manpower
• local access
• other access

Question 9

What is the term for a delegated underwriting partnet?

Answer 9

coverholder

Question 10

How much of Lloyd’s business do coverholders write?

Answer 10

30 - 35%

Question 11

How do Lloyd’s assess potential coverholders?

Answer 11

• suitability and experience of those working for applicant
• systems and controls in applicant’s infrastructure
• financial status of the applicant
• authority of applicant to operate in specified territories

Question 12

What system is used for application to be a coverholder?

Answer 12

Atlas

Question 13

What does a coverholder applicant need to indicate?

Answer 13

• type of work they are applying to be involved with

- areas of the world they operate from and from which they will be accepting risks

Question 14

What are the two types of coverholder?

Answer 14

• approved coverholder

- service company

Question 15

What is a service company?

Answer 15

Set up by a managing agent with authority to write insurance under a binding authority from a syndicate

Question 16

What are the types of authority for coverholders?

Answer 16

• full authority: complete control
• pre-determined rates: where possible price-matching or discretion allowed for renewal business
• pre-determined with no discretion
• prior-submit: all risks referred to underwriter prior to binding

Question 17

What do binding authority agreement documents consist of?

Answer 17

• binding authority schedule
• binding authoirty wording
• non-schedule sections

Question 18

What are the six sections of the minimmum standards?

Answer 18

• culture, strategy, and fair treatment of customers
• setting standards and reviewing performance
• claims preserving
• product and assessment review
• customer experience
• outsourcing

Question 19

What are the key points of the minimum standard realting to management of delegated underwriting?

Answer 19

• managing agent has clear strategy for writing and managing delegated underwriting as part of overall business plan
• thorough due diligence of coverholders
• binding authorities in place with each coverholder
• proactive management of delegated underwriting contracts to make sure complianance with contract conditions

Question 20

What should an audit policy state?

Answer 20

• frequency of audits
• scope of review in the audit
• details of the auditors

Question 21

What are areas that would be examined by an audit of delegated underwriting?

Answer 21

• underwriting
• accounting
• financial reporting
• credit control
• IT systems
• documentation controls
• compliance with Lloyd’s regulations