You are the Broking Director for AP plc, a global insurance broker. Under your guidance, your team has designed a new horizontal placement facility (quota share facility) to assist with placing clients' business. This facility will encompass all of AP plc's global property portfolio. This will enable AP plc to have a 20% automatically agreed share in place, for all its property clients when placing their business.

The facility has already received the required insurance market support from participating insurers. All necessary due diligence activity has been completed on the facility. The facility now only requires your agreement for it to be implemented. If the facility is implemented, there will be a significant increase in revenue for AP plc.

You will be discussing the facility with some of your most important clients. You will also discuss it with the other lead underwriters, who will not be participating in this facility, but with whom AP plc places other business. These discussions are to gauge the reactions and concerns about this facility.

(a) Explain, with justification, one significant benefit and one significant challenge for AP plc's clients, should this horizontal placement facility be implemented. (6)

(b) Explain, with justification, two significant concerns for the non-participating lead underwriters,

should this horizontal placement facility be implemented. (10)

(c) Discuss how AP plc will manage each of the concerns, you have explained in (b) above, that the non-participating lead underwriters may have, should this horizontal placement facility be

implemented.