When you are told that a GI company is a London-market one, what should you be thinking of? (I'm asking in the context of using all the info in the question to try and generate points, eg if it were motor insurance you think small but frequent claims, short tail, competitive etc). Thanks.
Not quite Jensen! Have a look at pages 4-5 of Chapter 7: When UK general insurance is discussed you will often hear of “the London Market”. This does not include all general insurance companies with London phone numbers! It does mean a specialised group of insurers, writing business along broadly similar lines, which is based in an area within the City of London. You can simplistically think of it as “Lloyd’s plus company equivalents”. That is, Lloyd’s is an important part of the London Market, and the rest of the market is made up of companies with buildings near Lloyd’s offering insurance similar to Lloyd’s. The London Market concentrates mainly on providing insurance and reinsurance cover to companies. It specialises in: the larger direct insurance risks – both property and liability – that are beyond the capability of other direct insurance companies (for example, energy and aerospace risks) international risks reinsurance. Kind regards, Katherine.
So for the purposes of the exam, if you get a question which includes a London market company, you can think things like: commercial risks often very large risks often volatile risks international risks insurance and reinsurance business the underwriter's subjective view often plays a key role. Kind regards, Katherine.
I'd also add: Writes risks using slip system, so perhaps limited capacity. Usually sold through broker, so beware broker balances and accumulations of risk, relationships, etc..
Broker balances = money held by brokers yet to be transferred to insurer. Gives you no investment income in the meantime, and possible default risk, but generally a short-term realisable asset.
