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22 Cards in this Set
- Front
- Back
Legal terms for client broker and other |
An "agent" is authorised by the 'principal' to bring that principle into a contractual relationship with a 'third party' |
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Methods of Creating an Agent/principal relationship |
1. Consent - aka agency by agreement. Documents used are called Terms of Business Agreements 2. Necessity - when a person has been trusted with someone's goods. 3. Ratification - principal agrees the actions of the agent after the event. Effectively agreeing terms retrospectively which were not there before. |
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TOBAs |
Terms of Business Agreements The terms between a broker and principal and between broker and insurer for an agency by consent |
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Define ratify |
To sign or give formal consent to (something), making it official |
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Who are agents of insured |
Any intermediary that gives advice - on cover or the placing of insurance - to the insured on how to make a claim |
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Who are agents of insurer |
And intermediary that - can bind cover i.e. has authority to accept risk - has authorisation to collect premiums and does so |
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Undisclosed principal |
English law permits an agent to act for an undisclosed principal whilst seeming to act on their own behalf. Rare in London Market |
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2 types of Actual Authority |
- Express authority - in the TOBA - Implied authority - may be in 2 kinds. -- If have to take a certain action to carry out express authority OR -- usual for the particular situation or business arrangement ? |
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Apparent (ostensible) authority |
(tbh I don't see how this is authority at all) Ostensible authority is that which comes with a certain position in an organisation. Eg/ broker has authority to bind property insurance. Clients don't know what authority broker has and they bind a deal for liability insurance. The principal may not have a choice but to ratify the contract by subsequently accepting the deal. It is possible the principal could then sue the agent. |
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Stupid rule of apparent authority |
It lasts for a while after termination of a contract between client and broker. And a broker using apparent authority can go and bind risks on behalf of the insurer (as a dick move) To avoid a principal would inform people relationship has ended |
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Who regulates insurance intermediaries |
FCA |
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Wholesale and retail brokers 8.8 |
non-lloyds brokers ARE now allowed access to Lloyd's market (contrary to what I previously thought)
But there is still often a chain of brokers, commonly due to geographical spread.
Client contact broker = retail Insurer contact = wholesale.
Possibly scenario where roles are by two offices of same broking firm |
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Who pays for the broker? |
The Insurer! It's taken out of the premiums usually as %. |
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Services provided by Independent intermediary |
- review clients needs - advice whether risk is insurable - decide best market for the risk - negotiate t&C's - provide advice (eg. On wording) - negotiate renewals - advise and assist with claims Other possible services - risk management advice - recoveries (recoveries = subrogation. Same terms used in diff markets, rec = marine sub = non) |
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Services provided to insurer 8.9 |
Specified in TOBA - binding risks (if authorised, perhaps under a binding authority) - settling claims (if authorised, perhaps under a binding authority) - issuing documentation - collecting premiums |
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Security Rating |
All brokers have committees or senior individuals who constantly review insurers' financial stability. They will not use insurers they deem unstable |
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Accounting and Settlement |
In the placement process, historically brokers would present XIS with LPANs (premium info) in paper format which they would review and return. Now the process is electronic and the system is called Accounting and Settlement. It involves a combination of scanned documents and electronic messaging |
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Broker Insurance Document (BID) |
Summary of the risk provided to the client by their broker which sets out the key elements of the risk. Given after placing process is complete as alternative to formal policy or MRC |
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XChanging Claims Service (XCS) |
Only for Lloyd's Assist claims process |
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Companies equivelant of XCS |
Once the correct combination of insurers agree to a settlement the claims system they use triggers money movement |
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Enterprise Act 2016 |
A remedy for insureds who believe claim paid late. Insureds have one year after claim paid to file for legal damages. |
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Agents duty of personal performance |
Not delegating authority to another without permission of principal |