F.A.Q.

One might say, “here’s another site trying to sell insurance products”. Not at all. What we have tried to do is provide you with general information as well as some useful documents. We sincerely hope you will consider it this way and let us have your remarks by emailing us.

In very simplistic terms, the act of insurance is to protect one’s self or assets from a financial disaster should a claim occur, by paying a nominal amount (premium) into a central fund together with others, so that if one claims, an indemnity will be paid out from the fund to cover the loss.

Some risks may be too large for one Insurer. The latter may therefore consider sharing this risk with other Insurers. This is called coinsurance. On the other hand, Insurers may wish to quantify and limit the amount of claims they may have to pay out. To do this, they may take out excess of loss reinsurance whereby any claim exceeding a set amount will be limited to this set amount, any amount exceeding this limit being paid by reinsurers.

The first generally represents an Insurance Company. He may in some cases be even exclusive, meaning that he can only offer this Insurers products. The question being that the products offered may not always correspond to clients needs. A Broker on the other hand represents the client and has, as a consequence, a certain number of legal obligations towards them. He is not therefore by definition attached to any Insurer, as they would be considered as suppliers, but he may have preferential commercial terms with some which enable him to issue policy documents, pay claims within certain limits, etc. In practical terms, it is impossible for any Broker to deal with all Insurance Companies available on the market. Within The Eric Blair Network, we limit ourselves to Companies with good financial solidity, over 20 years of existence, a long standing relationship with our offices (since 1977 for some) and offer a level of service we consider appropriate for our clients’ needs.

To deal with Lloyd’s market directly, a broker must be officially recognised as holding a cover with certain Underwriters at Lloyd’s. In doing so, he may write certain classes of risks directly without having to refer back to Underwriters: this is often compared as “holding the pen” on behalf of Underwriters. But he must comply with Lloyd’s very strict regulation.

If one knew how much Insurers pay out every day on claims, this rumour would not exist. Whilst most perils may be covered by Insurers, some may be excluded from policies for different reasons:

• Local legislation may forbid Insurers to cover certain perils.
• Certain perils may be considered as unavoidable resulting in coverage being impossible, either for financial or technical reasons. This has been noticeable in the last years following September 11th events especially whereby terrorism just became uninsurable in certain cases.
• Policies always take into consideration the laws governing the country where the risk is located. Insurers must therefore follow these in the way claims are settled.
• Insurers must also protect shareholders interests or if a mutual, its members. Besides, if they were to pay more claims than they collect premiums, they could not exist very long.

Many factors come into account. Firstly, certain policies, such as French householder’s contracts, are index linked. Secondly, depending on the results of the Company, rates may need to be increased following a poor claims to premium ratio. Thirdly, low returns on interests on money and stock markets will not permit a certain flexibility on Underwriting results. Fourthly, general catastrophes or exceptional events such as we have seen in the last few years will impose increases on reinsurance costs, which in turn will force Insurers to increase premiums. Another reason is the constant increase of certain costs related to some specific insurance aspects such as medical treatment, car repairs, construction costs, etc.

It is the amount left for the assured to pay under which or as from which Insurers will not pay

In France/Monaco, almost all policies are automatically renewed every year, unless written notice is give within due delay by either party. Brokers and Agents only receive the renewal amount of a premium the last days of the month preceding the month the policy is due for renewal. By the time these amounts are integrated in their own system, printed out and posted, they may arrive after the renewal date. But, as most policies are renewed automatically, the policy remains in force.If payment is not made within a certain delay, then a registered letter will be sent out leaving the legal day before cover ceases (30 days for suspension of cover and a further 40 days for cancellation, the premium remaining due).

Most policies in France/Monaco are renewed automatically. Written notice must be given at least two months prior to the annual renewal date by registered mail. Other conditions may enable you to cancel without needing to respect this delay:

• Disappearance of the risk, sale for example
• Change of marital status if this has an effect on the actual risk covered
• If the premium increases more than the conditions stated in the policy (effective 30 days after cancellation is requested).
• If the risk changes and the new conditions are not accepted (only certain cases are acceptable)
• If the Loi Chatel can apply within a certain time frame (note that this law does NOT apply in the Principality of Monaco).