Lloyd s Broker Accreditation Broker Required Documentation - Xchanging Contains details of the Broker Procedure Manual and Test Scenario examples Prepared by: Vicky Hopkin Date: July 2005 Email: vicky.hopkin@xchanging.com
Lloyd s Broker Accreditation Broker Procedure Manual Structure
Lloyd s Broker Accreditation Broker Procedure Manual Structure Following any applicable visits to Xchanging sites which should demonstrate the nature of the checks carried out by the Xchanging processing areas and the requirements of any Broker documentation, a Procedure Manual must be produced to demonstrate a clear understanding of the procedures that need to be put in place by a broker in order to successfully process via Xchanging with Lloyd s Syndicates. This Procedure Manual should be roughly 10 pages of A4 in length and the following areas must be addressed as part of the documentation produced: General Overall process flow showing controls in place at all Xchanging touchpoints. Query Handling: Who will respond to Xchanging queries and by what method? Documentation delivery: How will documents be delivered to Xchanging s office and returned to the broker once processing is complete? Premiums Details of differing documentation requirements for each class of business, including that to be issued to the clients. Claims Details of claims broking/handling procedures. Details of claims diary system including archiving and destruction procedures. Knowledge of Lloyd s 1999 Claims Scheme demonstrated. Business Scenario documentation must also be attached as appendices to this Procedure Manual. Brokers may use their own data to produce an LMP slip, LPAN and LCCF for each of the main classes of business in which they are involved. Xchanging will have the slips validated to ensure they are LMP compliant and will check LPAN and LCCF documentation to ensure the details reflect the slip and are adequate for processing. These examples must be successfully completed before Xchanging provide a formal sign-off to Lloyd s regarding a broker s processing capabilities. Brokers can obtain Business Case Skeletons from Xchanging from which they can produce these examples if preferred and should contact Vicky Hopkin on 020 7327 8786 or at vicky.hopkin@xchanging.com for further details. Vicky Hopkin July 2005
Lloyd s Broker Accreditation Test Business Scenarios
AVIATION DIRECT SCENARIO 1 Aviation Direct Placing Scenario Rocket Airways is based in Bermuda and has a fleet of Helicopters operating out of US and Brazil. It wants coverage for its Hulls and spares together with some liability insurance for 12 months 30/4/05 Maximum hull value will be $125M and the liability limit will be $1.5M any one aircraft or occurrence. Deductibles will be $100,000 for hulls and $50,000 for liability Premium will be $500K War, Nuclear and FG exclusions 2 Aviation Direct Claims Scenario Rocket Airways have had a claim arising out of the use of one of their helicopters. An individual has suffered personal injury and a claim has been submitted for $1.25M Underwriters have agreed a final settlement of $1.175 gross and surveyors fees of $100,000
MARINE DIRECT SCENARIO 1 Marine Direct Placing Scenario Vessel owner, Happy Shipping GMBH, headquartered in Hamburg. Fleet of 25 tankers and 10 coastal cargo vessels. Insurance required is ITC Hulls 1/11/95. Owner prepared to accept a deductible of $25,000 per vessel but with an aggregate deductible of $100,000 any one policy year. Policy to run for 12 months at 30/04/05 Policy limit will be $5,000,000 any one vessel, any one loss with an aggregate cap of $20,000,000 any one policy year. 2 Marine Direct Claims Scenario Vessel, MV Happy Sailor, insured under Happy Shipping policy 12 months 30/04/05, the cargo onboard has suffered PA damage to the amount of $1M. A partial settlement has been agreed by underwriters of $750,000 gross together with payment of legal fees of 50,000
NON MARINE DIRECT SCENARIO 1 Non Marine Direct Placing Scenario Mr Bun the large bakery manufacture wishes to insure his buildings, his machinery and his business interruption exposure. He has one factory in Paris, one in Australia, one in New Jersey and his headquaters are in Edinburgh. Policy to run for 12 months with effect from00:00 30/04/05. Limit of $5m for buildings and 360 days for BI Exclusions to include War and terrorism, Electronic Data and Bio-chem Premium 100,000 inclusing 2,000 TRIA/GAREAT/ATIA 2 Non Marine Direct Claims Scenario Large fire in Paris factory, leading to destruction of building and subsequent shutdown of business for 2 months. Underwriters are prepared to make a payment on account of $250,000 gross purely for the damage to the building and adjusters fees of Euros100,000.
AVIATION REINSURANCE SCENARIO 1 Aviation Reinsurance Placing Scenario Island Hopper insurance based in Bermuda writes a book of aviation hull, spares and liability insurance and wants to take out a 40% quota share of its entire book of aviation business. 2 Aviation Reinsurance Claims Scenario Rocket Airways have had a claim arising out of the use of one of their helicopters, and the original policy is written by Island Hopper insurance. An individual has suffered personal injury and a claim has been submitted for $1.25M Underwriters have agreed a final settlement of $1.175 gross and surveyors fees of $100,000 Present the claim under Island Hoppers 40% QS reinsurance of its aviation account
MARINE REINSURANCE SCENARIO 1 Marine Reinsurance Placing Scenario Vessel owner, Happy Shipping GMBH, headquartered in Hamburg. Fleet of 25 tankers and 10 coastal cargo vessels. Has a captive insurer, Happy Insurance Ltd which takes all the original risks arising out of the fleet. Wishes to purchase excess of loss reinsurance for 12 months at 01/01/05 covering hull risks only, and requires three layers, being $250 xs $250K, $500K xs $500K and $4M xs $1M any one vessel any one loss. 3 reinstatements at 100% RIP and 1 at 50%. Full claims control Premium is $100K ($50k first layer, $30k second layer and $20k third layer) 2 Marine Reinsurance Claims Scenario Claim is presented under Happy Insurance Ltd reinsurance. This policy covers a fleet of 35 vessels. Loss details are as follows: MV Happy Sailor has struck an iceberg and is a total loss in the value of $1.25M. Happy Insurance has XL reinsurance in three layers being $250 xs $250K, $500K xs $500K and $4M xs $1M any one vessel any one loss. 3 reinstatements at 100% RIP and 1 at 50% on each policy. Prepare the claim documents for presentation, taking into account that this is the 2 nd loss of this size suffered during this policy year. Outstanding fees are being advised of $75K
NON MARINE REINSURANCE SCENARIO 1 Non Marine Reinsurance Placing Scenario DoughBoy Reinsurance Company of London want a facultative reinsurance policy to cover their policy issued to Mr Bun the large bakery manufacturer. The original policy covers buildings, his machinery and his business interruption exposure. He has one factory located in Paris, one in Australia, one in New Jersey and his office headquarters are in Edinburgh. Policy runs for 12 months from 00:00 30/04/05 GMT. Original policy terms are as follows: Limit of $5M for buildings and 360 days for BI Excess of $100,000 for buildings and 14 days for BI Exclusions to include War and Terrorism, Electronic Data, and Bio-Chem Premium of 100,000 Doughboy are prepared to take an additional excess of $500K over and above the original PD excess. 2 Non Marine Reinsurance Claims Scenario Large fire in Paris factory, leading to destruction of building and subsequent shutdown of business for 2 months. Doughboy have made a payment on account of $750,000 gross purely for the damage to the building and adjusters fees of Euros 100,000 and wish to claim them back on the reinsurance. There is an outstanding to be notified of $500K and Euros 200K.
AVIATION LINESLIP / COVER SCENARIO 1 Aviation Lineslip/Cover Placing Scenario Underwriters will issue a binding authority to Little Plane limited to underwrite hull and liability risks relating to private light aircraft on their behalf. The binder will run for 12 months from 01/01/05 and will cover risks located in the UK only; however the insurance will cover flights within Great Britain, Channel Islands and Europe. Little Plane will have authority to bind up to a hull value of $2M with referral to leading underwriters for anything above that figure, and claim settlement authority of $2,500 without an adjusters report and $20,000 with an adjusters report. All other claims to be submitted to underwriters. Bordereaux to be submitted monthly. 2 Aviation Lineslip/Cover Claims Scenario Present a monthly bordereaux for a selection of claims falling under the above binding authority, creating the settlements documents as well.
MARINE LINESLIP / COVER SCENARIOS 1 Marine Lineslip/Cover Placing Scenario Captain Birds Eye wishes to place a cover to insure his shipments of frozen vegetables on a worldwide basis for 12 months at 01/01/05. He anticipates one shipment a month and a maximum value any one shipment of $1M and an annual aggregate of $12M. IFFC(A) conditions apply. All claims to be referred in the first instance to the nearest Lloyds Agent. Deductible will be 5% of value shipped for each shipment. Premium will be agreed on a M& D and adjustable basis. 2 Marine Lineslip/Cover Claims Scenario Claim is presented under Captain Birds Eye cover. This policy covers all shipments 12 months at 01/01/05 with a maximum value any one shipment of $1M. Loss details are as follows: MV Happy Sailor has struck an iceberg and gone down on 30/04/05 with a complete cargo of frozen peas. The cargo is a total loss in the sum of $750K. Prepare the claim documents for presentation. Outstanding fees are being advised of $75K
NON MARINE LINESLIP / COVER SCENARIO 1 Non Marine Lineslip/Cover Placing Scenario The American Society of Professional Hairdressers would like to place a lineslip to provide PI coverage for their members. The lineslip will incept 01/01/05 and risk will attach for 12 month periods throughout the cover period. The coverage will be a maximum of $10M any one hairdressing firm, with an excess of no less than $500K (but can be more on individual declarations). There is no delegated claims authority under this cover. Premium will be nil deposit and based on 5% of annual turnover in 2003 for each member declared. Leading underwriter will bind risks on behalf of the rest of the market. 2 Non Marine Lineslip/Cover Claims Scenario Claim made against Curl Up and Dye, a hairdresser declared under the American Society of Professional Hairdressers PI lineslip. Claim is for a bad perm done on 30/06/06 and the allegation is negligence. Claim has been agreed by underwriters in the amount of $250K with fees of 100K
NON MARINE US BINDING AUTHORITY SCENARIO 1 Non Marine US Property Binding Authority Placing Scenario A non marine binding authority has been granted to Duplo Associates based in Denver, Colorado to write the following risks for both physical damage and business interruption. No BI without concurrent PD coverage - Retail outlets, small commercial properties such as garages/engineering firms and schools/other public buildings. Risks are limited to assureds domiciled in USA & properties located in USA. Syndicate is prepared to grant Duplo limited delegated underwriting authority to write PD and BI for risks with a PD value up to $250,000 at rates to be agreed between underwriters and Duplo. All other risks are to be submitted to underwriters for prior agreement before they can be bound. Any risk where BI coverage requested is over 150 days must be done as prior submit. Wind, flood and earthquake risks are not to be covered in any event. No risks to be bound for more than 12 months. Claims handling to be done by BrightMind Inc, who are a third party administrator. They have settlement authority up to $10,000 without reference to an adjuster, up to $50,000 with an adjusters recommendation to settle and all claims over $50,000 must be referred to underwriters. Monthly bordereaux for premiums and claims to be submitted no later than 60 days after month end. 2 Non Marine US Property Binding Authority Claims Scenario Prepare the settlement documentation for one months sample claims bordereaux and in addition for two individual losses over $50,000. These losses are as follows: Poppet High School, damage to building caused by delivery lorry crashing into gymnasium wall. PD loss $125,000, with $50,000 o/s and $20,000 adjusters fees to be paid.
2 NON MARINE US PROPERTY BINDING AUTHORITY CLAIMS SCENARIO cont. WreckIT garage, fire leading to destruction of inspection equipment. PD loss $500,000 and BI payment on account of $300,000 with o/s of $150,000. No adjusters fees advised. 2005, Xchanging February 2005
NON MARINE UK/EUROPE BINDING AUTHORITY SCENARIO 1 Non Marine UK/Europe Binding Authority Scenario Hot Time Limited are being granted a limited binding authority by Lloyd s underwriters. This will cover property and business interruption risks for the following types of business: 1. Nightclubs and other recreational buildings in France and Switzerland only 2. Retail 3. Offices Other than the geographical limitations indicated above, the locations of risk can be UK or Northern Europe (not including Baltic States). No risks to be bound for more than 200,000 any one risk without prior referral to underwriters. Any risk in the Baltic States or Middle East can be referred to underwriters for prior approval. No BI for risks outside the EU. Rating schedule for all other risks to be provided by underwriters Bordereaux to be submitted monthly for premium and claims. 2 Non Marine UK/Europe Binding Authority Claims Scenario Prepare and present a monthly claims bordereaux and an individual claim presentation for the following loss Date Of Loss: 30/04/2005 Loss; Fire in a disco in Chamonix, claim for 300,000 PD supported by an adjusters report and 50,000 outstanding. Fees being paid of CHF 50,000.