Page 7: Transactions
To understand the difference between transactions in a consumer market such as private car insurance and in a business market such as marine insurance, it is necessary to identify the organisations involved in the chain.
Very often a consumer will purchase motor or household insurance directly from an insurer. Therefore, a typical consumer private motor policy transaction might be represented as shown in the diagram.
However, when seeking cover for more complex commercial risks businesses usually employ the services of a broker. The placement of a commercial risk in the Lloyd's market might be represented as shown here.
Brokers use their knowledge of the market and close relationships with underwriters to spread large, unusual or difficult risks between syndicates. Underwriters on the syndicates take on risks brought to them by the brokers, and using their knowledge and experience provide tailored insurance at competitive prices.
Both the broking firms and syndicates have competitors in the Lloyd's market and this competition within the market assists in trying to provide the best cover at the best price for the client.