Flashcards in Chapter 2 - The insurance market Deck (70)
What groups of people is the insurance market made from?
Buyers, intermediaries, aggregators ,insurers ,re-insurers
What divisions do buyers come under?
Private, Partnership, companies, public bodies, associations and clubs
What is a partnership?
This is when several buyers come under one legal existence.
What are the divisions of insurers?
Propriety, Societas Europeas, Mutual, Captives, Protected Cells and Lloyd's
What is a propriety company?
This company is owned by the shareholders
What is a Societas Europeas?
This company can register in any member state of the EU and transfer to other member states without needing the liquidate the company.
What is the difference between a Mutual company and a mutual indemnity company?
A mutual company is owned by the policyholders and mutual indemnity while still owned by policyholders have their origins in being a self-managed pool.
Where is mutual indemnity associations usually found?
In marine insurance where protection and indemnity associations insure certain aspects of marine hull liability
What is a captive insurance company?
This is a tax efficient method of transferring risk and only offer insurance to the parent company not the general public.
What is a protected cell company?
This company is similar to the captive company but differ in that each company is it's own separate entity that have their own board of directors but still owned by the parent company.
What are the 2 different insurer designed functions?
Composite and Specialist
What is a composite insurer?
These accept several types of business.
What is a specialist insurer?
These only accept one class of business
What is Lloyd's?
Lloyd's is an institution not an insurer and provides facilities for brokers to place risks within it's own market.
What are the 3 different groups at Lloyd's?
Syndicates, Managing agents and member agents
What is a syndicate?
A group of private individuals who provide financial backing for risks.
What is a managing agent?
A member agent is employed by syndicates to employ underwriters who accepts risks on behalf of the syndicate.
What is a member agent?
Advise clients on the advantages and disadvantages of investing in the Lloyd's market, syndicate selection and performance, reserve requirements and compliance issues.
Who are the firms approved by in Lloyd's?
The FCA and PRA
What is the Proposal form called at Lloyd's?
What is the process called of and underwriter signing a slip?
'Scratching the slip'
What is the process of preparing and signing the slip called?
'Xchanging' and is done centrally at Lloyd's.
what is the percentage called that a broker receives for his services?
Commission also known as a 'Brokerage'
What restriction was removed by the Legislative reform (Lloyd's) Order 2008?
The restriction allowing only Lloyd's brokers to place business at Lloyd's.
What is contract certainty?
The complete and final agreement of terms (including signed down lines) between the insured and the insurer before inception.
What does it refer to when a broker places more than 100% of a slip and proportionally reducing Lloyd's syndicates or the insurers share?
Signing down the line.
What is an intermediary?
Known as an agent authorized by one party the 'principle' to bring that principle into a contractual relationship with another, termed the third party.
What do the FCA require all 'persons' to be that carry out insurance mediation activities?
They must either be authorized by the FCA or Exempt.
What does it mean by Exempt?
To be exempt you must adopt a status of 'Appointed representative' or introducer appointed representative , be a member of a professional body that has equivalent rules to the FCA.