CII LM3 flashcards
CII LM3 · Build recall with a focused review session.
32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Subscription market
- A market where several insurers each accept a percentage share of the same risk on identical terms, each being severally liable only for its own line.
- Lloyd's syndicate
- A group of capital providers (members) whose funds support underwriting of risks by underwriters employed by a managing agent.
- Severally liable
- Each subscribing insurer is liable only for its own proportion of a loss, not for the shares of other subscribers.
- Lead underwriter
- The underwriter who first assesses the risk, sets terms and price, and whose terms the following market accepts or declines.
- Managing agent
- A Lloyd's firm that manages a syndicate, employs its underwriters and is responsible for its underwriting and regulatory compliance.
- Placing broker
- The broker who presents the risk to underwriters, negotiates terms and obtains subscriptions on behalf of the insured.
- Binding authority
- A written delegation allowing an MGA or coverholder to accept risks on an insurer's behalf within specified class, geographic and financial limits.
- Coverholder
- A firm authorised under a binding authority to underwrite risks on behalf of an insurer, often in a specific territory or class.
- Loss adjuster
- An independent specialist who investigates the cause and quantum of a loss and reports to insurers to assist claims settlement.
- Material fact
- Information that would influence a prudent underwriter's decision on acceptance, terms or premium, which the insured must disclose.
- Slip
- The placing document recording insured, risk, terms, premium and each subscriber's line and initials; it is the basis of the contract.
- Line
- The percentage or share of a risk accepted by a single subscribing insurer; all lines must total 100% for full placement.
- Scratching the slip
- Obtaining sufficient subscriptions to complete the placement so that the risk is fully bound across all lines.
- Binding
- The point at which an underwriter signs the slip or agrees terms, creating a legally enforceable contract of insurance.
- Endorsement
- A document amending the policy after inception, such as changing limits or adding an insured, agreed by affected subscribers.
- Technical premium
- The premium calculated to cover expected claims, expenses and a profit margin over the underwriting cycle.
- Burning cost
- A rating method that estimates future losses from the insured's historical loss experience adjusted for exposure and inflation.
- Deductible
- The amount the insured must bear before the insurer responds to a loss, reducing premium and discouraging small claims.
- Accumulation
- The total exposure an insurer holds to a single event or territory across many policies, monitored to control catastrophe risk.
- Utmost good faith
- The mutual duty of insured and insurer to act fairly and disclose material information, reformed in the UK by the Insurance Act 2015.
- Warranty
- A promissory term in the policy; breach can suspend or discharge cover depending on the wording and applicable law.
- Condition precedent
- A policy condition that must be satisfied before cover responds, such as prompt notification or payment of premium.
- Fair presentation
- The insured's duty under the Insurance Act 2015 to disclose material facts and avoid misrepresentation when placing the risk.
- Claims agreement agreement
- A market arrangement under which the lead or claims lead settles claims on behalf of subscribers, binding followers to the outcome.
- Case reserve
- An estimate set aside for a known reported claim, reviewed as the investigation and settlement progress.
- IBNR
- Incurred but not reported: a reserve for claims that have occurred but have not yet been notified to the insurer.
- Subrogation
- The insurer's right, after paying a claim, to pursue third parties responsible for the loss to recover the amount paid.
- Facultative reinsurance
- Reinsurance of a single specified risk, offered and accepted individually rather than under an automatic treaty.
- Excess of loss treaty
- Non-proportional reinsurance that responds to losses above a retention up to a limit, often with reinstatements.
- Follow the settlements
- A reinsurance clause requiring the reinsurer to accept claim settlements made by the cedant in good faith and within the original terms.
- PRA and FCA
- The UK's twin regulators: the PRA for prudential soundness and the FCA for conduct, market integrity and consumer protection.
- Sanctions screening
- Checking parties against designated-person and country lists before binding risks or paying claims to comply with financial sanctions.