Chapter 2 IF1

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What groups of people is the insurance market made from?
Buyers, Intermediaries, Aggregators, Insurers, Reinsurers
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What types do buyers come under?
Private individuals, partnerships, companies, public bodies, associations and clubs
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What is a partnership?
This is when several individuals pool resources in a business each partner has joint and several liability for their actions
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Identify seven different types of insurer
1. Proprietary 2. Societas Europeas 3. Mutual companies 4. Mutual indemnity associations 5. Captives 6. Protected Cells 7. Lloyd's
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What is a proprietary company?
This company is owned by the shareholders
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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.
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What is the difference between a mutual company and a mutual indemnity company?
A mutual company is owned by the policyholders and mutual indemnity association while still owned by policyholders have their origins in being a self-managed pool.
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Where are mutual indemnity associations usually found?
In marine insurance where protection and indemnity clubs insure certain aspects of marine hull liability
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What is a captive insurance company?
Insurance owned by a large non-insurance company that insures the risks of its parent company only and not others.
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What is a protected cell company?
Similar to the captive company but differs in that it operates in two parts the core which manages the PCC as a single entity and then cells within the PCC in to which the cell owners can insure their own risks like a captive cell company
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What are the 2 different insurer designed functions?
Composite and specialist
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What is a composite insurer?
These insurers accept several types of business.
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What is a specialist insurer?
These only accept one class of business
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What are the 3 different groups at Lloyd's?
Syndicates Managing agents Members agents
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What is a syndicate?
A group of private individuals (names) or corporate members who provide financial backing for risks in Lloyd's..
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What is a managing agent?
A managing agent is employed by Lloyd's syndicates to employ underwriters who accept risks on behalf of the syndicate.
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What is a member agent?
Members agents 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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Who are the managing agents in Lloyd's regulated by?
They are dual regulated by Lloyd's itself but also by the PRA and FCA
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What is the document used to place business called at Lloyd's?
A 'Slip' (Market Reform Contract)
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What is the process called of and underwriter signing a slip?
'Scratching the slip'
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Which organisation checks and issues Lloyd's policies and collects premium on behalf of syndicates?
'Xchanging'
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What is the percentage of the premium called that a broker receives for his services?
Commission also known as a 'Brokerage'
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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
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What is contract certainty?
The complete and final agreement of terms (including signed down lines) between the insured and the insurer before inception.
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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.
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What is an intermediary?
Known as an agent authorized by one party the 'principal' to bring that principal into a contractual relationship with another, termed the third party.
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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.
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What does it mean by Exempt?
To be exempt you must adopt a status of 'Appointed representative' or Introducer Appointed Representative , or be a member of a professional body that has equivalent rules to the FCA.
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What is an Authorized persons?
An individual or firm which is authorized by the FCA to engage in regulated activities.
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What is an appointed representative?
An individual/company that is appointed by an authorized person (the principal) under a contract. They may be acting for an insurer or intermediary that is regulated by the FCA and PRA eg a garage selling extended warranty insurance for a customer.
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Who is responsible for making sure that an appointed representative follows all the FCA Rules?
The authorized persons.
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What is an introducer appointed representative?
Persons who are only authorized to distribute 'non-real time financial promotions' such as brochures eg a vet giving customers leaflets about pet insurance
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Who is responsible for the introducer appointed representative?
The authorized persons.
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Who are Lloyd's insurance brokers? and who are the regulated by?
These are brokers that have proved their knowledge and expertise to the council of Lloyd's they are regulated by Lloyd's and the FCA.
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Identify seven services provided provided by independent intermediaries to clients ?
1. Find best market 2. Negotiate terms 3. Advise on policy wordings 4. Review client needs 5. Negotiate renewals 6. Negotiate claims 7. Risk management advice
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What further services can be provided by an independent intermediary under the Terms of Business Agreement with the Client?
1. Risk management advice 2. Assisting with presentation of claims 3. Assisting with recovery of uninsured losses.
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Why has the insurance market consolidated?
1. Regulation 2. Pressure on earnings 3. Age of brokers selling
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Types Of Distribution channels
Direct – employees of the insurer sell the insurance products, websites or direct mailing, Indirect marketing – intermediaries paid by the insurer to promote products on the insurer’s behalf
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What Is Bancassurance
Describes the relationship between a bank and an insurance company whereby insurance products are sold to the bank’s customers.
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What is reinsurance
Is the way that an insurance company can insure the risks they have accepted (to allow them to protect their portfolio from the impact of losses and/or allowing an insurance company to increase their capacity for a particular risk)
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What does the Motor Insurers' Bureau do
Compensates victims of negligent, uninsured or untraced motorists.
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What agreements does the MIB have with the government
Two separate agreements with the government (Untraced Drivers’ Agreement and Uninsured Drivers’ Agreement)
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What is the subsidary of the MIB
Has a subsidiary known as UK Information Centre (UKIC) which was created to try to reduce the number of uninsured drivers in the UK.
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Name nine types of professionals in insurance
Underwriters, Claims personnel, Loss adjusters, Loss assessors, Surveyors, Actuaries, Risk managers, Compliance officers, Internal auditors
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Other cards in this set

Card 2

Front

What types do buyers come under?

Back

Private individuals, partnerships, companies, public bodies, associations and clubs

Card 3

Front

What is a partnership?

Back

Preview of the front of card 3

Card 4

Front

Identify seven different types of insurer

Back

Preview of the front of card 4

Card 5

Front

What is a proprietary company?

Back

Preview of the front of card 5
View more cards

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