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LM2 > Chapter 6 - Broking > Flashcards

Chapter 6 - Broking Flashcards

Broking (57 cards)

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1
Q

What is the formal term for broking?

A

Insurance intermediation

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2
Q

Who is generally the principal?

A

The insured

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3
Q

What are chinese walls?

A

Separating roles to prevent conflicts of interest

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4
Q

What are the 3 ways that agency can be agreed?

A

Express
Ratification
Necessity

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5
Q

What are 5 duties that agents have towards their principals?

A

Follow instructions
Act in good faith
Don’t delegate without permission
Act with due care
Account for funds

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6
Q

If an agent acts outside of their authority, what can the principal do?

A

Ratify their actions, do nothing
Ratify their actions, then sue them for claims
Refuse their actions, expose them to third party for claims

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7
Q

What is a wholesale broker?

A

Broker representing the insurer

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7
Q

Why does the agent need to act with due care?

A

Otherwise they will be subject to a professional negligence claim

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8
Q

What is a retail broker?

A

Broker representing the insured

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9
Q

What is the producing broker?

A

Broker for the insured which is producing the work

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10
Q

What is a single tied agent?

A

Broker for only 1 insurer, does not work in London markets. Restricted to a set number of products

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11
Q

What is a multi-tied agent?

A

Broker for 1 insurer, sells 1 product per insurer. Does not work in london market

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12
Q

What is an indepedent intermediary?

A

Not affiliated with any insurer, represents insured. Traditional london market broker

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13
Q

What is a surplus lines broker?

A

Mostly for US markets - advises on risks which local lines cannot take. Details must be added to the MRC

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14
Q

What is an open market correspondent?

A

OMC are intermediaries but not an approved Lloyds coverholder
Advises on risks which are individually placed i.e. not through delegation or slips
Introduces business directly or through lloyds broker

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15
Q

What is a Lloyds broker?

A

FCA + Lloyds approved broker

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16
Q

What is the order of placing for a broker?

A

Review client requirements
Compile MRC
Review quotes and finalise placement
Compiling documentation
Request premiums
Submit to Xchanging
Make any changes

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17
Q

In reviewing a client’s requirements, what is a key consideration?

A

Solvency, otherwise could lead to prof. neg. claim

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18
Q

What type of supplementary information is submitted by the insurer in compiling the MRC

A

Surveys and records

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19
Q

What is material information?

A

Information which the broker would consider to be important to the risk

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20
Q

What are some activities in finalising the placement? What are the electronic platforms used?

A

Confirming with lead and following underwriters
Signing down if shares > 100%

PPL or Whitespace

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21
Q

What does line to stand mean?

A

The underwriter’s line is not to be signed down even if the total signed share > 100

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22
Q

What is done when compiling documentation to Xchanging for premiums?

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A

Submitting MRC and LPANs
Tax requirements

23
Q

What is the system called which moves premium and records risk information?

Study These Flashcards
A

Accounting and Settlement

24
What is the central repository for risk documents? What information is included in unique reference code
Insurer's Market Repository Signing number and date contributes to UMR (unique market reference)
25
What is the process for changing risks?
Via endorsement papers, through brokers
26
What is the process for claims processing?
First notification Experts instructions Negotiation Settlement Recoveries
27
How are experts instructed?
Through the broker
28
What is the broker's role in settlement?
Insurer pays money into broker accounts, which reaches the insured
29
How do brokers assist in subrogation?
Combine total amounts (minus deductible) or subrogration
30
What are TOBAs and who do they need to be issued to?
Terms and conditions under which a broker does business. Issued to insurers, insured, broker. Or managing agents per sydnicate
31
What is regulatory status in TOBA?
Insurer and broker warranty that they are authorised to deal business
32
What is the broker's authority in a TOBA? What is risk transfer TOBA? What is a non risk transfer TOBA?
Outlines broker's authority to hold premiums in insurer RIsk Transfer Toba = money collected is deemed to be paid to insurer Non risk = money not allowed to be held in insurer's name
33
What is renumeration?
Brokerage / commission
33
What is holding money / taxes
Funds withheld by broker but taxes paid on interest held
34
What is a flat fee?
Paid by client, sum of money paid Must be agreed before client incurs any cost
35
What is brokerage / commission
Fee for placing business, paid by insurer. Usually held directly through the total premium paid to insurer. Must disclose amount if insured asks
36
What is collecting commission?
Fees charged (1%) on collecting claims
37
What is coverholder & profit commission?
Commission collected through taking on risks through delegated underwriting Profit commission - additional commission made on profit made
38
What is special technical advice
Specialist advice offered by inhouse services in return for commission
39
What are the two main principles of the IDD? What info about renumeration do they need to disclose? How has brexit impacted this?
Act in best interest of customers Information provided must not be misleading Renumeration nature and basis must be disclosed Brokers have had to setup offices in home state
40
What are the 3 pillars of FCA
Event driven work Product review Business conduct / interest of customers
41
What FCA rule is about client monies and what does it stipulate?
CASS Client money must be kept in separate bank accounts
42
What is the difference between a statutory and non statutory trust account?
Statutory - Broker cannot fund payments out of account which they hold money in. Used for when the client money has been received. Can only pay once if they receive the money Non statutory - Money can be paid out even if the other party has not paid in
43
What is the maximum period that a broker has to pay out funds to clients?
1 day since receiving receipts
44
What is DPA 2018? What are its 3 main elements?
Data protection in UK Confidentiality for medical/sensitive data Access to data that is only necessary. Delete if requested Provide ICO with more powers
45
What data does UK GDPR apply to?
Personal data of living individual
46
What are special categories of personal data?
Sensitive personal informationWh
47
What are the 6 Data protection principles? (PAIDSL)
Purpose limitation Accuracy Integrity Data minimalization Storage limitation Lawfulness
48
What are the 6 bases for lawful processing (CCPLLV)
Consent Contract Public Task Legal obligation Legit interest Vital interest
49
What are the 8 rightsof GDPR (RAIDPEOR)
Restrict processing Access Informed Data portability Profiling & Automation Erasure Object Rectification
50
What is the maximum fine for breaching GDPR
17.25M or 4% of Global revenue
51
How does GDPR protect against transferring data overseas?
Outside the EU, data transfer is restricted
52
Under the IDD, what role was first introduced?
Those who sell directly to consumers
53
What activity is a broker least likely to be involved in?
Arranging reinsurance agreements
54
Under ICOBs, what must the broker do regarding fees when disclosing to clients?
Fees must be disclosed before any costs are incurred
55

LM2 (10 decks)

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