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Chp 2 Flashcards

(83 cards)

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1
Q

What groups of people is the insurance market made from?

A 
Buyers
Intermediaries
Aggregators
Insurers
Re-insurers
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2
Q

What divisions do buyers come under?

A 
Private
Partnership 
Companies
Public bodies
Associations 
Clubs
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3
Q

What is a partnership?

A

This is when several buyers come under one legal existence

This is when several individuals pool resources in a business each partner has joint and several liability for their actions

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4
Q

What are the divisions of insurers?

A 
Propriety
Societas Europeas
Mutual companies 
Mutual indemnity
Captives
Protected Cells 
Lloyd’s
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5
Q

What is a proprietary company?

A

This company is owned by the shareholders

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6
Q

What is a Societas Europeas?

A

This company can register in any member state of the EU and transfer to other member states without needing to liquidate the company

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7
Q

What is the difference between a Mutual company and a mutual indemnity company?

A

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

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8
Q

Where is a mutual indemnity association usually found?

A

In marine insurance where protection and indemnity associations insure certain aspects of Marine hull liability

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9
Q

What is a captive insurance company?

A

Insurance owned by a large non-insurance company that insurers the risks of its parent company only and not others

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10
Q

What is a protected cell company?

A

This company is similar to the captive company but differs in that it operates in 2 parts

1) the core - manages the PCC as a separate entity
2) cells within the PCC - the cell owners can insure their risks in the same way as if they owned their own captive insurance company

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11
Q

What is a parent company?

A

?

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12
Q

What are the two different insurer designed functions?

A

Composite and specialist

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13
Q

What is a composite insurer?

A

These insurers accept several types of businesses

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14
Q

What is a specialist insurer?

A

These insurers only accept one class of business

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15
Q

What is Lloyd’s?

A

Lloyd’s is an institution not an insurer and provides & facilities a place for brokers to place risk within its own market

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16
Q

What are the three different groups at Lloyd’s?

A

Syndicates
Managing agents
Member agents

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17
Q

What is a syndicate?

A

A group of private individuals (names) or corporate members who provide financial backing for risks in Lloyd’s

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18
Q

What is a managing agent?

A

A managing agent is employed by Lloyd’s syndicates to employ Underwriters who accept risks on behalf of the syndicate

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19
Q

What is a member agent?

A

Someone who advise clients on the advantages and disadvantages of investing in the Lloyd’s market, syndicate selection and performance, reserve requirements and compliance issues

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20
Q

Who are the managing agents in Lloyd’s regulated by?

A

They are dual regulated by Lloyd’s itself but also by the FCA & the PRA

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22
Q

Who are the firms approved by in Lloyd’s?

A

The FCA and the PRA

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23
Q

What is the proposal form called at Lloyd’s?

A

A ‘slip’

Market Reform Contract

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24
Q

What is the process called of an underwriter signing a slip?

A

‘Scratching the skip’

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25
Q

What is the process of preparing and signing the slip called?

A

‘Xchangung’ and it’s done centrally at Lloyd’s

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26
What is the percentage called that a broker receives for his services?
Commission also known as brokerage
27
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
28
What is contract certainty?
The complete and final agreement of terms (including signed down lines) between the insurer and the insurer before inception
29
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
30
What is an intermediary?
Known as an agent authorised by one part t(e ‘principle’ to bring that principal into a contractual relationship with another, termed the third party
31
Hat do the FCA require all ‘persons’ to be that carry out insurance mediation activities?
The must either be authorised by the FCA or Exempt
32
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 profession body that has equivalent rules to the FCA
33
What is an authorised persons?
An individual or firm which is authorised by the FCA to engage in regulated activities
34
What is an Appointed representative?
An individual or company that is appointed by an authorised persons (the principle) under the terms of a contract. They may be acting for an insurer or intermediary that is regulated by the FCA and PRA. Eg garage selling extended warranty insurance for a customer
35
Who is responsible for making sure that an appointed representative follows all the FCA rules?
The authorised persons
36
What is an introducer appointed representative?
This persons are only authorised to distribute ‘non-real time financial promotions’ such as brochures
37
Who is responsible for the Introducer appointed representative?
The Authorised persons
38
Who are Lloyd’s insurance brokers? And who are they regulated by?
These are brokers that have proved their knowledge and expertise to the council of Lloyd’s they are regulated by the FCA
39
Identify 7 services provided by independent intermediaries to clients
1) find best market 2) negotiate terms 3) advise on policy wording 4) review clients needs 5) negotiate renewals 6) negotiate claims 7) risk management advice
40
What is reinsurance and what is it’s purpose?
Reinsurance is a risk transfer mechanism for insurers to be able to insure risks that may be too large and the insurer is poised to lose financial in the event of a claim
41
What is the insurer known as when reinserting?
Cedant or ceding office
42
What further services can be provided under the Terms Business Agreement with the client?
Risk management advice, assisting with presentation of claims, and assisting with the recovery of uninsured losses
43
What are the benefits m reinsurance
1) improved customer care 2) support for insurers moving into new business areas 3) protects portfolios against large losses / catastrophes 4) smoothed peaks and troughs in loss experience
47
What are the different types of re-insurers?
Specialist, Syndicates, insurance companies that act as re-insurers
48
What is it called when a re-insurer, re-insured a peril?
Retro-ceding & the risk transfer called retrocession
49
What are the two main reinsurance centres?
Lloyd’s & International Underwriters Association
50
What is the role of an Underwriter?
To manage to pool as effectively & profitably as possible by 1) assessing risk 2) deciding whether or not to accept risk 3) determine the terms and conditions 4) set the premium
51
What is the role of claims personnel?
Deals with all claims quickly & fairly Differentiate between real & fraudulent claims Assess the realistic cost of the claim & put aside an amount in the accounts - reserving Determine when experts need to be involved Settle claims with minimum expense
52
What is a Loss Adjuster?
A person hired by the insurer to assess the policy wording & investigate claims
53
What is a loss assessor?
A person hired by the insured to prepare & negotiate claims on their behalf
54
What is an Actuary?
A person who applies statistical & probability theories to problems of insurance & helps companies with pricing & claims reserving
55
What is a risk manager?
A person who creates effective control methods of companies to control the various risks that effect businesses
56
What is a compliance officer?
A person that makes sure companies abide by the rules set out by the FCA and PRA
57
What is an internal auditor?
A person(s) that monitor and evaluate how well risks are being managed
58
Who are the ABI?
Association of British Insurers
59
Who are the IUA?
International Underwriters Association
60
Who are BIBA?
British Insurance Brokers Association
61
Who are LMRC?
London market regional committee
62
Who are LIIBA?
London International Insurance Brokers Association
63
Who are LMA?
London Market Association
64
Who are MIB?
Motor Insurance Bureau
65
Who are UKIC?
UK Information Centre
66
What are consolidators?
Companies that grow through the formal acquisition of others within the insurance market
67
What are the two types of distribution channels?
Direct and indirect
68
What is a direct distribution channel?
Employees of the insurer sell the insurance products
69
What is an indirect distribution channel?
Intermediaries sell products on insurers behalf being paid by the insurer to promote their product
70
What is Takaful insurance?
Insurance that complies with Islamic principles
71
Identify the 3 Islamic principles that insurance is not compatible with
Gharar (uncertainty) Maisir (gambling) Riba (interest)
72
Identify 5 Islamic principles that Takaful insurance embraces
1) Mutuality & cooperation 2) shared responsibility 3) joint indemnity 4) common interest 5) solidarity
73
Identify 3 areas where the state is the insurer
1) social services 2) pension provision 3) as guarantor of pool
74
Identify 4 services that an intermediary may provide to insurers
1) collect premium 2) commit insurer if have authority 3) settle claims if have authority 4) issue motor or other cover notes
75
Identify two ways the booking market has consolidated
1) consolidators | 2) broker networks
76
What is a broker network
Alliances of brokers who receive centralised services from a senior firm
77
Identify 5 feature of direct distribution channels
1) no intermediary costs (+age for insurer) 2) advertising costs (-age for insurer) 3) quicker for buyer 4) only one insurer’s product sold (-age to buyer) 5) no advice
78
Identify 3 features of indirect distribution channels
1) insurers pay commission to intermediary 2) intermediary offer advice 3) insurers may delegate their underwriting authority to intermediary
79
What is banassurance?
Banks sell insurance companies’ products
80
Who are the MGAA
Managing General Agents’ Association - represents interests of managing general agents founded in 2012
81
Who are the cii
Chartered institute of insurance
82
Yo are the CILA
Chartered institute of loss adjuster
83
Who are IFoA
Institute and Faculty of actuaries
84
What are some of the disadvantages of direct marketing?
No independent advice
85
What are some feature of direct marketing channels?
Reduced costs for sales staff | Greater sense of ease for the buyer
86
What is an aggregator
A website that allows buyers to compare quotes from corporate insurance brokers & companies
87
When can property damage be claimed under the untraced drivers agreement?
When the vehicle is identified but the driver is untraced

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