Chap 8-10

Question 1

Under the Insurance Act 2015, what are the reasons for unexpected termination of a contract?

Answer 1

• breach of duty of fair presentation
• breach of warranty
• fraud

Question 2

What is a service company?

Answer 2

Managing agents set up insurance orgs in various locations (UK/abroad)

These orgs underwrite business on behalf of syndicate and have syndicate/MA brand behind them

Question 3

What is writing risks on a services basis?

Answer 3

In EU, insurers can stay in home country and write risks coming out of other countries on a ‘cross-border’ basis.

Regulated only by home regulator

Question 4

What is writing risks on an establishment basis?

Answer 4

Insurers can choose to set up an office in another country and write risks from there

Question 5

Contract certainty is intended to ensure that all parties are certain of all the terms at what point?

Answer 5

The point the contract comes into force

Question 6

In the London Market, at what point is the contract between insured and insurer normally deemed to be concluded?

Answer 6

When the UWR puts their line down on an MRC

Question 7

Under the GUA, a slip leader can be from…

Answer 7

Any part of the London Market

Question 8

What does ‘days of grace’ mean on a renewal policy?

Answer 8

An insurance policy can be renewed on the original terms after the original policy has expired, even if the premium has not been paid

Question 9

What type of business does NOT have a standard version of the MRC?

Answer 9

Company Market buiness

Question 10

When is an insurer operating in the London Market NOT likely to use a standard London Market policy wording?

Answer 10

When another market is writing the primary layer

Question 11

What is a coverholder?

Answer 11

A parter for delegated UWR agreement under a binding authority

• must obtain approval from Lloyd’s to work w/ a Lloyd’s syndicate
• sponsoring broker/MA
• Update ATLAS platform once a year w/ info (for Lloyd’s)

Question 12

How are claims handled on a consortium basis?

Answer 12

The leader is responsible for handling all claims

Question 13

A binding authority is written on a subscription basis. Who is generally responsible for organising an audit of the arrangement?

Answer 13

The leader

Question 14

What registration, if any, does Lloyd’s require of binding authority agreements?

Answer 14

All but restricted authority agreements must be registered

Question 15

A coverholder has binding authority where it is not able to make decisions and all decisions need to be referred to the underwriters. What is this type of authority known as?

Answer 15

A prior submit binding authority

Question 16

How long does it take for a coverholder to be approved by Lloyd’s?

Answer 16

Within 25 working days

Question 17

In the IUA Company Market, how many insurers make claims agreements in the non-marine market?

Answer 17

All individual insurers on a risk

Question 18

In the IUA Company Market, how many insurers make claims agreements in the Marine market?

Answer 18

If Lloyd’s involvement, one company can bind for rest of market

If no Lloyd’s involvement, first two companies required to agree

Question 19

In the IUA Company Market, how many insurers make claims agreements in the Aviation market?

Answer 19

If direct business, first two companies agree
If fac reinsurance, lead company only

Question 20

In the IUA Company Market, how many insurers make claims agreements in the Marine/Aviation market, if it is an Excess of Loss reinsurance?

Answer 20

First 2 insurers must always agree

Question 21

A claim is eligible for handling under the Single Claims Agreement Party if it is…

Answer 21

Under £250k and neither complex nor controversial

Question 22

A claim is considered complex (2 leaders) if the amount claimed on a single risk is…

Answer 22

• > £1M for 3rd party business
• > £2M for 1st party
• > £5M for Excess of Loss Reinsurance

Question 23

A claim is considered complex (2 leaders) if (non-financial)…

Answer 23

• it is in excess of policy limits
• allegation against insurers of non-cmpliance with regulatory requirements
• potential dispute proceedings

Question 24

What is organisational conflict in terms of claims handling

Answer 24

The whole insurer decides it cannot be an agreement party on a claim, but it will still pay

Question 25

What is the Enterprise Act 2016, in relation to claims?

Answer 25

Insured can take action for **damages for late payment **of a claim any time up to 12 months after the claim was paid

Question 26

What is the max monetary amount the Financial Ombudsman Service can award?

Answer 26

• £415k for complaints received after 1st April 2023
• £190k for complainst received before 1st April 2023

Question 27

How is the Financial Ombudsman Service funded?

Answer 27

• a levy paid by all firms
• case fee payable by the firm to which the complaint relates

Question 28

Under the Financial Services Comp. Scheme (FSCS), protection is 100% for…

Answer 28

• compulsory insurance
• professional indemnity
• long-term insurance (pensions/life)
• claims for injury, sickness, infirmity

Otherwise, protection is 90%

Question 29

Within the Lloyd’s Market, what are the documents called that set out the rules concering the agreement parties required for claims?

Answer 29

Lloyd’s Claims Lead Arrangements

Question 30

What are the advantages of a Captive Insurer?

Answer 30

• tax efficiency
• not passing funds to insurer
• not exposed to market risks

Question 31

What are the disadvantages of a Captive Insurer?

Answer 31

• funding staff
• ensure appropriate premium for risk
• no access to insurer knowledge
• no external funds for losses

Question 32

What is a Mutual Company?

Answer 32

• Owned by POLICYHOLDERS
• they share in the profits by way of lower premiums
• ‘Limited by guarantee’ = max liabs is limited to their premium

Question 33

What is a Proprietary Insurance company?

Answer 33

• Owned by SHAREHOLDERS
• Contribute to share of firm, therefore profits belong to them
• LIMITED LIABILITY = shareholder’s liabs limited to value of their shares