2. Lloyd's and Insurance Market Flashcards by Annie wood

When do intermediaries not need to be authorised

If EU passporting applies

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How many limbs to Fit and Proper test

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Do brokers have to complete Lloyd’s accreditation process

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What is the only Article for which there are applicable exclusions under FSMA

Article 10

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If insurer UW risk in different country, what must they ensure?

Licensed in accordance w/ local laws

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What is a broker

A of insured w/ specialist knowledge

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What is an excess

Sits under policy limit, paid by insured - if within excess, policy not triggered

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327 FSMA states what exemption

No need for authorisation if work incidental

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What is an ‘authorised person’ for FSMA?

Lloyd’s syndicate

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Who regulates the intermediaries in Lloyd’s?

FCA

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What is the ‘approved person’ regime?

Approval by FCA to perform 1+ controlled functions on behalf of ‘authorised person’

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What is a regulated activity

Specified Activity and Specified Investment

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Who are subject to compulsory J of Financial Ombudsman

Insurers

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Why are spent convictions under ROA still considered for Fit and Proper test

ROA (Exceptions) Order requires disclosure for certain positions

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What is acceptance on subscription market

Scratching placing slip

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What will the FCA consider if criminal record

Nature of crime - e.g. basis of theft is dishonesty

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How many links in the Chain of Security?

Three

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What is considered for ‘Competence’ in Fit and Proper test

Qualifications

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What is an insurance tower

Risk spread out in layers

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What two entities regulate insurance Cs and Lloyd’s entities

FCA + PRA

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What is Solvency II

Aimed at consumer protection + enhancing competition through three pillars

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What are the sanctions under 23 FSMA

Criminal - imprisonment and/or fine

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What is the ‘subscription market’?

Risk is shares between insurers, and premium pro-rated

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Two biggest areas of Lloyd’s

Property and casualty

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Third limb to Fit and Proper test

Financial soundness

What do brokers use for contract certainty on subscription market

Checklist to ensure satisfying Contract Certainty principles, and Market Reform Contract for standardised slip

What powers do Council of Lloyd's have for breach of its byelaws

Enforcements Ps and impose a range of sanctions (from fines to bans)

Three kinds of intermediaries at Lloyd's

Managing A, coverholders and brokers

What happens on subscription market if later insurer changes terms?

Only applicable to that insurer

How is there internal regulation at Lloyd's

Byelaws created by the Council of Lloyd's

What Principles/Rules are applicable for PRA

8 Fundamental Rules

What happens if 19(1) FSMA still applies

Need FCA authorisation

What contains vetted policy wording that can be incorporated by mere ref to relevant clause in slip

Lloyd's Wordings Repository

What Principles/Rules are applicable for FCA

11 Principles for Business

What is the nature of all names admitted to Lloyd's - LLC, unlimited etc.

Limited + severally liable

What are '**Funds at Lloyd's**' in the CoS

Names provide capital calculated by syndicate's business risk, held in trust

What case showed that insured has separate Cs w/ each insurer on a subscription market

General Reinsurance

Second link in Chain of Security

Funds at Lloyd's

Possible exemption for 19(1) FSMA

327 FSMA

Four specified activities (number)

10, 56, 57, 58

Who provides claims handling services for Lloyd's?

XChanging

Upside of Solvency II

Permits continued EU passporting after Brexit

What three things must approved persons do to become approved persons

Meet Fit and Proper test, comply w/ APER + COPs, and report anything that may affect ongoing suitability

General rule under FSMA

19(1) General prohibition against carrying out RA unless authorised or exempt

What is an example of a controlled function for 59 FSMA

D of syndicate

What is a downside of Solvency II

Onerous capital requirements

What are managing As

Managing day-to-day of the syndicate

What are 'Syndicate Level Assets'

Sufficient reserves held by each syndicate in trust.

First link of Chain of Security

Syndicate Level Assets

What is the FOS

Consumers + small businesses can complain to FOS for free, or pays compensation if authorised firm unable

What is the 'Central Fund'

Annual contributions from Names + subordinated debt

What is a coverholder

MAs delegate authority to UW to other C/P - that C/P = coverholder

Does the FOS apply for commercial (re)insurance?

What is a 'Follow the Leader' clause?

Followers bound by lead's decisions on claim liability + quantum

First limb to Fit and Proper test

Honesty

How do brokers become permitted to conduct business at Lloyd's

Meet high standard of business conduct, agree TOBA w/ each MA it wishes to deal w/, and MA satisfied broker meets Lloyd's standards

Where is the Fit and Proper test

FCA Handbook FIT 2.1 - 2.3

Who are followers on a subscription market

Those that UW business below the lead UW on the placing slip

In subscription market, who usually negotiates policy wording and premium, and controls claims handling?

Lead UW

Aim of FCA regulation

Protect consumer

What is a deductible

Deducted from claim payment, so that the sum insured is actually less the deductible

What requires a person to be an approved person to carry out controlled functions?

59 FSMA

Where are the sanctions for breaching 19(1) FSMA

Why does Lloyd's have a Chain of Security?

Helps to support market confidence

General Reinsurance showed what?

Insurance has separate Cs w/ each insurer on a subscription market

If one percentage is to stand, what do you do before signing down

Subtract from % of total risk available

What is considered for 'Honesty' in Fit and Proper test

Criminal record, and if D of now insolvent C

What is an offer on the subscription market

Presentation of slip to UW

Where is 50% of Lloyd's business from (what J?)

US + Canada

What is the Lead UW

Usually the UW at the top of the placing slip

What part of FSMA defines regulated activity

Two specified investments (number)

75 and 86

Second limb to Fit and Proper test

Competence

Third link in CoS

Central Fund

What is the formula to sign down

(% of total risk available / % of total risk wanted) x % wanted by individual UW

What is signing down?

More than 100% of risk UW, so each percentage taken by insurer is signed down

Two possible exclusions for Article 10 FSMA

11 and 12 (EEA insurance + vehicle breakdown cover)

What is a signing slip

Produced after all risk UW to tidy up placing slip

When can a percentage of risk not be signed down

UW said percentage 'to stand'

2. Lloyd's and Insurance Market Flashcards

(79 cards)