C7 - Business support Flashcards
(40 cards)
How can CH-MGAs source business
- Targeting a niche
By identifying demand in an uptapped market, CHs can develop or alter products to get an influx of business. - Affinity relationships
Existing relationships with people in privileged postions or positions of trust can give them access to customers. - Existing clients
The current volume of clients may be sufficient for growth, offering a better product than their competitors will help win the business - New staff joining
As long as there are no non compete clauses in their employment contracts, new staff are a good way of fostering new relationships and gaining new business flows
What is a way in which CH-MGAs can broaden their distribution and attract new business
E-business formats (e.g digital underwriting)
What are some ways in which companies can marks their products
Can vary from advertising in various media to sponsoring events or education seminars
This should be targeted by a prior analysis of the distribution network and target audience to reach the most amount of likely customers
For very niche products how might these be offered
A membership organisation
Where a mail shot is used to attract new customers
If it is the holder of the insurance, it can offer it as a benefit to its members as part of their membership fee
What type of scheme offers highly specialist cover for a very focused target market
Affinity/group schemes
(E.g classic car insurance)
This way it can dominate a market by offering a very niche product as part of its membership giving garuanteed income steam with little to no individual sales
What was the outcome of the FCA report in 2019 concerning customers being disadvantaged by brokers having underwriting authority
That it had found no specific evidence of customer harm
What are the 4 latest requirements in FCA Consumer Duty
- Fair value - consumers receive both fair prices and quality
- Suitability and treatment - consumers receive suitable products and services and receive good treatment
- Confidence - consumers have a strong confidence and levels of participation in markets
- Access - diverse consumer needs are met
What can the CH-MGA to boost its existing reputation in a market/environment
Promoting its relationship with the insurer
The insurer should always be aware and approve of any marketing the CH-MGAs does with the insurers brand
This is less possible for a lineslip to have a ‘brand’
What can be delegated
Entirely up to the insurer
Any part of the UW, claims and document issuance can be delegated
The more that is delegated the speedier the process is for the client
When can an insurer use its own branding on a contract of insurance
When it writes 100% of the risk
When a risk is written by a group of Lloyd’s syndicates, who’s branding is used on the document
Lloyd’s
Who does a syndicate need to get approval from to use non-standard certificates
Lloyd’s
What was the issue with combined certificates for US business
The Lloyd’s logo being on a certificate where the total security wasn’t fully provided by Lloyd’s meant that the CH-MGA had to issue two separate certificates
Nowadays 1 certificate is normally issued, without the Lloyd’s logo and non-Lloyd’s security must be clearly identified
If the certificate doesn’t include a difference in terms and conditions, is the insurer able to deny a claim based on the fact the basis of the contract it had accepted excluded this aspect
Almost never
What Lloyd’s requirement in 2024 applied to all documents issued under a DUA
The contract has to identify the lead insurer rather than saying “underwriters at Lloyd’s” or similar
As a bare minimum, what period of time should organisations keep records and data for
7 years (being contract +6 years, which is written in English law contractual limitation period)
What is significant about the Insurance Act 2015 section 5 in DA
The insurer is deemed ‘to know something’
‘Only if it is known to one or more individuals who participate on behalf of the insurer in the decision whether to take the risk, and if so on what terms (whether the individual does so as the insurer’s employee or agent, as an employee of the insurer’s agent or in any other capacity)’
This means that the failure of information flow between CH-MGA and insurer has more serious consequences. It cannot argue any failure to comply with the duty of fair presentation by the insured.
How are premium and claims funds managed for lineslips and consortiums
The broker will be dealing with them the same as open market business.
Except if a TPA/DCA are used, they might not have a loss fund given to them.
When will a CH-MGA have to take responsibility for payment of certain taxes
In some jurisdictions
What are the 3 variation of a loss fund
- CH pays then seeks reimbursement from insurer
- Revolving loss fund - typical loss fund where it is topped up monthly after claims bdx is presented
- Premium funded loss fund - a % of premium is kept to build up a fund. (Less popular as it is difficult to manage the flow of funds)
What can funds held in dedicated accounts be used for other than premium and claims
Nothing - trust accounts are a standard requirement that should used for premium and claims ONLY
What is the major risk of allowing a 3rd party to handle/route funds on their behalf
If the 3rd party goes out of business and it’s accounts are frozen
What activities of financial crime could a CH-MGA commit whether it be deliberate or inadvertently
- Sanctions
Trading with an economically banned entity (country, organisation, group or individual). - Bribery
Every party in the chain of insurance must have clarity as to the role and any reimbursement they receive. The insurer needs to consider what part of the world the CH-MGA is from and measure the risk - Money laundering
Typical triggers would be: unclear insurable interest, short cancellation of contract and requests for payment to an unknown/unconnected party to the contract - Embezzlement
The stealing or misuse of money.
What are the 2 acts that pertain to bribery offences
Bribery Act 2010
US Foreign Corrupt Practices Act 1977
