What is the broker’s core role when selecting insurers?
To match insurers’ appetite, products and service with the client’s particular needs.
Before placing business, what must brokers check about an insurer’s status?
That it is properly authorised/licensed to write that class of business in the territory concerned.
In the UK, who must authorise insurers writing general insurance?
The PRA and FCA (or an EEA/overseas regulator with appropriate permissions or local licences).
What is a ‘home state’ regulator for an insurer?
The regulator in the country where the insurer is headquartered and authorised.
Why does the regulatory domicile of an insurer matter to a broker?
It affects prudential oversight, policyholder protection schemes and what happens if the insurer fails.
Give three examples of how insurers may differ by underwriting strategy.
They may focus on certain classes, write primary vs excess layers, or act as lead vs follow markets.
Why will no broker deal with every insurer in the market?
Because of agency setup costs, admin overheads and the need for realistic premium flows to each insurer.
Why will no insurer deal with every broker?
Insurers seek brokers who can deliver sufficient premium, fit distribution strategy and meet service standards.
What is a broker ‘panel’ of insurers?
A selected group of insurers that a broker regularly uses for particular classes or segments.
Why might a broker operate a preferred panel?
For better wordings, service, pricing, commission terms and operational efficiency.
What is the risk if panel selection is driven mainly by commission?
The broker may not meet ‘fair analysis’ expectations or client best-interest duties.
What is a ‘classified’ insurer in broker internal guidelines?
An insurer the broker may use freely for appropriate risks, subject to appetite.
What is a ‘restricted’ insurer in broker internal guidelines?
An insurer that may only be used for certain geographies, classes, sizes or on express instructions.
What should a broker do if a client insists on an insurer the broker has concerns about?
Warn the client, record the advice, obtain written instructions and file detailed notes of the discussion.
What must a broker do if an insurer’s internal classification deteriorates or is withdrawn?
Review affected clients, inform them and discuss whether to continue or replace cover.
What is an insurance ‘scheme’?
A facility with one or more insurers to write a defined book of similar risks on agreed terms.
Give two examples of risks often written under schemes.
Trades such as plumbers/electricians or niches like classic cars and affinity groups.
What is a lineslip?
A facility where one ‘leading’ insurer sets terms and other followers automatically accept an agreed share of risks.
What is a delegated (binding) authority?
An agreement under which an insurer delegates underwriting authority to a broker or coverholder to bind risks.
When operating a delegated authority, whose agent is the broker?
The insurer’s agent for underwriting and issuing cover, not the client’s.
Why do delegated authorities create conflict-of-interest risks?
Because the broker is both placing business and acting for the insurer, and may be incentivised by commission/overrides.
What management information do insurers usually require on delegated authorities at renewal?
Premium split by section, risk counts, claims paid and outstanding, retention and any underwriting/audit findings.
Why have some insurers become cautious about binders and facilities?
Previous poor control and profitability led to losses when brokers ‘gave away the pen’ too freely.
What is meant by a ‘fair analysis’ of the market for brokers?
Considering a sufficiently wide range of insurers and products before recommending a solution.
