Aggregator
A price comparison website for insurance quotes, such as Compare the market or Confused.com
What is the difference between a written line and a signed line
A written line is the share of the risk written by the underwriter.
A signed line is the reduced share of the risk after it has been “signed down” due to a risk being over subscribed
Downgrade clause
A clause which allows the insured to remove an insurer from their policy if:
- The insurers security rating drops below a certain level
- The insurer going into run off (the company has stopped writing new policies but continues to exist solely to manage and pay claims on existing, older policies)
- A certain underwriter leaving (Although uncommon)
Reasons for natural termination of an insurance contract
Cancellation by the insured - In a commercial contract there is no “cooling off period” and insurers can retain part of the premium if a policy is cancelled
Cancellation by the insurer - e.g. Marine hull insurance - Lack of insurable interest if the vessel gets sold on
Fulfilment - If a single vehicle is insured, it suffers a total loss and the policy pays
out in full, then the subject-matter of the insurance does not exist and the policy is
effectively terminated.
Expiry of the Policy period -
Reasons for unexpected termination of an insurance contract
Breach of the duty of fair presentation
Breach of warranty
Fraud
Reasons why an existing insurer may not want to quote for renewal of a policy
The contract has been loss-making
They are exiting that class of business
Reasons why its in an insurers best interests to quote for a renewal policy
It costs less to renewal, than it does to write business from scratch
The more stable the portfolio of clients, the more reliable the statistical data will be
Days of Grace
a perceived ‘elastic’ end to the previous policy
which allows the insured some scope should they be late in renewing their insurance. Unless
the policies specifically make provision, then they do not exist.
WNKORL
Warranted no know or reported losses
Used when a risk has been written after the inception date
Electronic Placing system in the London Market
PPL or Whitespace
Open Market MRC
Broker places each risk individually and visits each underwriter separately
Lineslip MRC
A preset group of Underwriters arranged by the broker.
As long as the nominated underwriter/s agree to the attachment of a risk, then the rest will be bound
Binder MRC
Underwriters have given delegated authority to an external third party that operates with strict parameters.
Preset level of authority and they report back on the risks they have written each month
Six sections of an Open Market MRC
Risk Details
Information
Security details
Subscription agreement
Fiscal and regulatory
Broker remuneration and deductions
What is the difference between percentage of whole, percentage of order and part of whole
Percentage of whole - Used the the slip order is 100%
Percentage of Order - Used when the slip order is below 100%
Part of whole - Used when the Underwriters share is in financial terms instead of percentages e.g. £10mil of £100mil
General Underwriters Agreement
An agreement between all underwriters on one MRC as to who will deal with any contract changes
Enable flexibility for each class of business to allow them to refine their rules
Ensure all underwriters are advised of the changes even if they aren’t involved in the agreement process
Clarify extent of the authority given to leaders and other UW to agree changes
Condition Precedent to contact / Condition precedent to Liability
Precedent - The condition must be be satisfied for either the contract to exist or for the insurer to have any liability under the contract
A breach of these conditions by the insured could have catastrophic effects on the insurance / claims
Exclusion
A risk that an insurer will not cover under a particular policy
Warranties
Promises made by the insured relating either to facts or to performance concerning the risk.
E.g. the insured saying that something will or will not be done
Saying there is a sprinkler system / Only personnel with a certain number of flying hours will operate equipment / A vessel won’t trade in certain areas of the world
Consumer Insurance (Disclosure and Representations) Act 2012
April 2013
Removed the ability of insurers to rely on the basis of contract clauses to create a warranty from a representation made by a consumer
Under the insurance Act 2015, what happens if there is a breach of Warranty
The policy is suspended until the breach is remedied and the suspension lifts automatically.
Insurer has no liability under the contract for any loss which occurs during the time of suspension
Service companies
Service companies operate in the Lloyd’s London Market whereby managing agents set up insurance organisations in various locations
The write business on behalf of the syndicate
What is the different between Services and Establishment business within the EU
Services - Insurers stay in their own country and write risks coming out of other countries on a cross border basis
Establishment - Insurers choose to set up an office in another country and write risks from there.
