LO - Brokers in London

6.1 Types of intermediaries

1. Wholesale - closest to insurer (People I email)
2. Retail - Closes to Client
3. Producing broker - supports clients with documents
4. Surplus line broker - (local USA not able to take risk on)

Others

1. Single tied agent - car insurer feeder
2. multi tied agent - multi line insurers
3. independent intermediary - FREE AGENT BROKER for client
4. Open Market Correspondent (OMC) - Client => Local broker (OMC) => Lloyd’s broker => Lloyd’s syndicates (think Canada and Italy) https://www.gassltd.ca/services/energy/

Broker who PASS REGULATORY can obtain Lloyd’s accreditation.

6.2 Role of broker in placing/claims

Placing - Think about car insurance PROCESS

1. Reviewing Client's needs… is exclusion leg3 required, Securities committee

2. Putting together a SLIP/MRC to obtain quotes… survey, loss record,

3. What are the difference between quotes?

4. Finalise placement: premium payment clauses (pro rate)

5. SUBMISSION to VELONETIC: Taxes, each stakeholder is liable + Accounting & Settlement

6. Request premium from client

7. Submitting documents to velonetic allow upload to IMR give signing number & date

8. Finally: On risk and make changes via Endt.

EMAIL or PPL What types of information is included in the submission…

Influence judgement of underwriter in considering a risk
Insurers LM2 - C4 - Market Security#4D) Rating agencies

Claims:

1. First advice: Presentation made considering the claim.
2. Expert Instruction: Independent via insurer or assigned by broker, Fees liable to insurer
3. Negotiation with claims: If hairy
4. Settlement: insurer pays broker to then pass towards insured.
5. Subrogation
   LM2 - C10 - Claims handling#Brokers role in claims process

6.3 TOBA what's inside

A broker has TOBAs with insurers, clients and possibly also with ‘producing brokers’.

High level

AGREEMENT WITH - managing agent + intermediaries
or
Agreement with - Intermediaries + Clients

Organisation such as LMA, IUA, LIIBA help develop template

What's inside

Really Responsible Agents Handle Compliance, Ownership, Law, Conflicts & Confidentiality.

1. Hold funds on insurers behalf
2. Regulatory status
3. Remuneration
4. Holding money & taxes
5. Standard cooperate procedures

I Can Definitely Prove My Duties Clearly Defined.

6.4 Broker Remuneration

1. How to pay the BROKER = Flat fee client pays, must be pre agreed and intentions stated.
2. Commission or Brokerage = payable by insurers.
3. Other fees/commissions = Collecting commission 1% of claims, Engineering fees.

6.5 Law of agency = Beware conflict of interest

Insurer gives authority to broker but is also responsible to insured. NEED "ethics wall"

• By agreement - writing
• By Ratification - behaviour accepted/condoned
• By necessity - last resort

Duties towards principles

• No sub delegate
• Good faith
• Follow instruction
• Accounting and skilled

As they can ratify, claim for damages, 3rd party claims

When clauses are introduced think why now?

Professional negligence against brokers/intermediaries

6.6 Brokers impacted vis EU Legislation or UK regulation

IDD - Insurance Distribution Directive

Insurance intermediaries are governed by IDD (distribution & conduct),

1. Registered IDD in home state. a piece of UK law origins in EU.
2. UK brokers need EU domiciled entities

PRINCIPLES must act fair and honestly, information should not be misleading....
DISCLOURE nature + basis of any remuneration
4. DORA = EU finance sector resilient to severe operational digital disruption.

FCA + DORA = test systems regularly and self assess

1. EU reg which transfers to UK
2. IT system testing sever operational disruption

UK CASS - (client money protection)

Client Assets rules (CASS) - Protects client money by requiring segregation and proper handling by brokers.

1. Statutory trust accounts - purely for clients monies. approval needed for payments
2. non statutory trust accounts - pay the claim to their client before the insurer pays the money to the broker

Data protection legislation

**UK GDPR + DPA 2018 (+ DUAA) Data protection law governs

1. how personal data is processed, stored, and protected.

ICO may levy fines of up to £17.5m or 4% of annual global turnover if higher.