Unit fourteen

Insurance

KEY VOCABULARY

People buy insurance to protect themselves against the losses that may result from an accident or catastrophe. For example, a company involved in a major construction project may have all the necessary skills for completing the job but there is still an element of risk. Extreme weather conditions or a natural disaster could damage or destroy the work that has been done. To protect itself, the company can pay a sum of money - a premium -to an insurance company who will underwrite the risk or guarantee to provide financial compensation if such an event occurs. The exact details of this insurance are contained in the insurance policy which is a document showing the risks that have been insured against and the levels of compensation that will be paid.

LEAD-IN

You will hear six people describing the principal risks that they face. Listen and identify the type of risk that each person is most likely to insure against. Choose from the following:

theft	burglary	personal injury
breakage	fire	third party

1......................................................................

2..................................................

3..................................................

4

READING

1. Read the text on the opposite page and decide to which group or groups the following statements refer. The first one has been done for you.

		Insurance Companies	Lloyd's of London	Insurance Brokers
	They provide a major reinsurance market.	V	V
	They deal with most of the UK company business.
	They earn almost £1 billion per week in premium income.
	They help people to choose the best insurance.
	They originally provided insurance for ships.
	They do most of their business abroad.
	They can be small operations managed by just one person.
	They cover many different types of risk.

INSURANCE■

Insurance Services

London is a leading centre for international insurance.

The industry in the UK is broadly made up	who look for the best quotation on behalf of
of three groups - insurance companies, Lloyd's	their clients.
of London and insurance brokers.	35 Although its origins lie with marine
The insurance companies and Lloyd's	insurance, Lloyd's now covers almost any risk,
5 combined provide a major reinsurance market.	from oil refineries, aircraft, road vehicles and
London's importance as an insurance centre, as	satellites - even to a wine taster's palate.
well as its comparative freedom from excessive	More than three-quarters of this business
regulation, has attracted many foreign	40 originates from overseas and its premium
reinsurance companies and brokers.	income is approximately £24 million every day.

Lloyd's of London

10 Insurance Companies

There are around 850 insurance

companies authorised in the UK but

approximately one half of them handle

more than 90% of company market

15 business. They provide the full range

of insurance contracts including life,

pensions, permanent health insurance,

marine, aviation, fire, accident, motor,

travel and household insurance.

20 The insurance companies have a

Insurance Brokers

combined premium income of more than	Brokers or intermediaries look for the best
£50 billion per year.	cover for their clients and offer advice on
Lloyd's of London	45 insurance. Their size can range from a simple
Lloyd's is a unique international insurance	one-man operation to a City-based
25 market. Lloyd's is a society of underwriters	international broker with a turnover running
made up of more than 26,000 members or	into millions.
'names' who as private individuals, accept	Brokers place their business with the
insurance risks and are liable for claims to the	50 insurance companies and - if they are
full extent of their personal wealth.	accredited - with Lloyd's. Brokers handle
30 The Members are grouped in some 350	approximately 70% of the general United
syndicates. Business is introduced by Lloyd's	Kingdom insurance business.
broking firms - there are some 240 of them -	British Invisibles, Corporation of London

2 Read the text again and decide if the following statements are true or false:

		T	F
	Any insurance broker can place business with Lloyd's of London.
	Lloyd's guarantees to provide cover for almost all risks.
	The insurance companies handle more business than Lloyd's.
	A Member of Lloyd's has limited financial liability.
	The London insurance market attracts little foreign business.

UNIT FOURTEEN

3 In which of the categories of insurance listed in paragraph 3 would the following be included?

VOCABULARY

1 Find words in the text to describe the people who do the following:

1 act as intermediaries and offer advice to customers about insurance

2 invest in the Lloyd's syndicates as private individuals

3 buy a service

2 Match the words from the text with their corresponding definitions.

1 reinsurance (line 5)	a	a request for compensation from someone who is insured
2 life (line 16)	b	the amount of money that an insurance company receives in payments from its customers
3 premium income (line 21)	c	protection through insurance
4 society (line 25)	d	the price at which an insurer would be prepared to accept a risk
5 claim (line 28)	e	a category of insurance related to the inevitability of death
6 syndicate (line 31)	f	an association of people with common interests
7 quotation (line 33)	g	the financial centre of London
8 cover (line 36)	h	a group of Lloyd's members who work as a unit
9 the City (line 46)	i	a way for insurers to reduce their own risks by placing some of their business with other insurers

INSURANCE■

3 Complete the following passage, using words from Exercises 1 and 2, and from the Key Vocabulary section at the beginning of this unit. Change the form of the words where necessary.

Roger Hartfield has recently applied to become a ¹_{...............................................} of a Lloyd's

²_{..................................................} This means that he will have to prove that he has a minimum of

£250,000 in capital which can be used as a guarantee for the ³_{.............................................} that

his representatives at Lloyd's will ⁴_{......................................................} If the income from the

⁵_{...............................................} of the customers who insure themselves with his group exceeds

the amount of money that has to be paid out in ⁶_{............................................} then Roger

Hartfield will make a profit. However, if that is not the case, he may have to sell his house and personal possessions in order to provide them with the necessary ⁷_{………………………………}

DISCUSSION

Look at the following list of people and items insured on the Lloyd's insurance market. Discuss the potential risks which are involved in each case, using a modal of possibility {may/might/could).

Example: The 286 Sainsbury supermarkets in the UK

- There may be a fire in a store.

- A shopper or an employee might have an accident outside or inside a store.

- The products sold by the store could be faulty.

1 Michael Jackson, Elton John and Rod Stewart

2 The Van Gogh art exhibition in Amsterdam

3 The world's largest cigar, twelve and a half feet long and weighing 110 kgs

4 A £1 million prize offered by Cutty Sark Whisky to anyone who can capture the Loch
Ness monster

5 The beards of the 40 members of the 'Whiskers Club' in Derbyshire in England

6 The outdoor opera festival in the Italian city of Verona

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