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April 2016 - Binders

Discussion in 'SP7' started by Jammy, Sep 5, 2019.

  1. Jammy

    Jammy Very Active Member

    Referring to Q4 (iii)

    From the Qn, I interpret that for calendar year 2014, total premium is 15m, and hence 4.5m of it (i.e. 30%) is binder premium.

    I understand that binder incepted from 1 July, and hence my avg inception date for this 4.5m will be 1 Oct 2014
    (Using additional assumption that, before 1July 2014, no binder in place).

    However, the soln states that this 4.5m represents the total premium written by the binder which incepted on 1July 2014.
    It has set avg inception date of binder premium accordingly.

    Since Qn wording lays out total premium of 2014 to be 15m, and 30% of it to be binder, is it incorrect to interpret that binder premium for calendar year 2014 is 4.5m ?

    Do point me to an existing thread on this if there exists one.
     
    Jammy, Sep 5, 2019
    #1
  2. Darren Michaels

    Darren Michaels ActEd Tutor Staff Member

    With a binding authority the premium written under the binder will be attributed back to the underwriting year of the syndicate in which the binder authority incepts.

    Remember with Lloyd's each underwriting year of the syndicate is treated as a separate premium trust fund.
     
    Darren Michaels, Sep 6, 2019
    #2
    Jammy likes this.

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