English for the Insurance Business

1
English for the Insurance Business

• Avv. Carlo Galantini
• Studio Legale Galantini Heibron Cocco-ordini
• Milano

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What is insurance
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How insurance handles risk

• Underwriting
• Assessment
• Statistics
• Acceptance, exclusion, declinature
• Quotation of price
• Handling of funds
• Investment
• Solvency margin
• Indemnification
• Assessing the damage
• Insured peril
• Proximate cause
• subrogation

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Essential features of Insurance

• Possible to calculate chance of loss
• Capable of financial measurement
• Loss must be fortuitous
• Insurable interest
• Utmost good faith
• Not against public interest
• Loss must not be catastrophic

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Law of large numbers

• As the number of exposure units increases, the
  more certain it is that actual loss experience
  will equal probable loss experience

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Insurable Interest

• MUST BE some property, rights, interest, life,
  limb, or potential liability capable of being
  insured
• This MUST BE the subject matter of the insurance
• Insured MUST benefit from its safety and be
  prejudiced by its loss or damage (equivalent
  terms used for liability)
• The relationship between the insured and the
  subject matter MUST BE recognised at law

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Utmost good faith

• Definition of a material fact
• Every circumstance is material which would
  influence the judgment of a prudent insurer in
  fixing the premium or determining whether he will
  take the risk

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Some facts requiring disclosure

• Marine
• Type of cargo
• Carried on deck
• Sailing near war zone
• Life
• Medical history
• Hazardous pursuits

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Principle of indemnity

• The insured shall be placed by the insurer in the
  same financial position after the loss as he
  occupied immediately before the loss

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Proximate cause

• If an excluded or uninsured peril caused the
  loss there will be no cover

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Subrogation

• The right of a person to stand in the place of
  another and avail himself or herself of all the
  rights and remedies of that person
• Insurer indemnifies
• Then they have the right to recoup their money
  through the courts

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Types of insurance

• Marine
• Fire
• Life accident

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Types of insurance

• Insurance of the person
• Insurance of property
• Insurance of liability
• Insurance of interest

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Types of insurance

• Every individual or organisation can incur
  liabilities if others suffer loss to person or
  property through their careless or negligent
  acts, defects in their property or goods supplied
  to them.

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Liability

• Public liability
• Personal liability
• Employers liability
• Professional liability
• Products liability

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Functions of reinsurance

• Additional capacity
• Protects against catastrophical events
• Stabilise results
• Financial support
• Market intelligence
• Advice direct insurer
• Improve the margins

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Reinsurance
Proposer Original Insured
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Reinsurance

• Cession
• Retention

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Reinsurance

• Facultative Reinsurance
• Treaty Reinsurance

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The London MarketWhat?

• Worlds leading market for internationally traded
  insurance reinsurance
• Entirely non-life
• Emphasis on high cost, high risk, unusual risk
• Largely a subscription market (handled by
  brokers)

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The London MarketThe Players

• ILU
• LIRMA
• Fringe companies contact offices
• Protection Indemnity (PI) Clubs other
  mutuals
• Pools
• Lloyds
• Brokers

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LLOYDS

• Edward Lloyds coffee house
• Clientele
• Function
• business

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LLOYDSToday

• Marketplace
• Names
• Syndicates
• Managing agents
• Brokers
• Room

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LLOYDSBroker

• A Lloyds accredited broker
• Present a slip
• A leading underwriter specialised in a field
• Every underwriter takes a lead
• Business is struck in utmost good faith

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LLOYDSMembers

• Names
• Unlimited liability
• Working Names
• External Names
• Corporate members
• 1994
• Funds
• Liability (liable to the full extent of their
  assets liability of shareholders is limited to
  their share)
• Managing agents

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NamesThe storm

• Catastrophes
• Asbestosis (employers liability)
• LMX-spiral (excess of loss reinsurance)

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LLOYDSAfter the storm

• Decrease in syndicates and Names
• Larger syndicates
• No longer unlimited liability obligation
• Introduction and steady increase of corporate
  capital
• An increased level of capacity

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LLOYDSLloyds security

• Premium Trust Fund
• Members fund
• Names assets corporate members assets
• Stop loss fund
• Lloyds Central Fund
• Net assets of the Corporation of Lloyds