Read the below if you would like to place a risk at Lloyd's
Clients based in UK
Before a risk can be placed in the market a number of interactions must take place:
The customer (which might be an individual, company or other Lloyd's syndicate) approaches a Lloyd's accredited broker with the details of a risk to be insured.
To find a Lloyd's accredited broker - click here
- The Lloyd's broker approaches a specialist underwriter (a leader) in the relevant class of business to discuss premium, terms and conditions. If the underwriter is interested, a proposal will be made to accept a percentage of the total risk. A number of underwriters may accept portions of one risk. This is known as a subscription market.
- The broker feeds back information to the customer to enable the customer to place an order.
- The broker prepares a 'slip' with the details of the insurance, which is signed by the lead underwriter. The broker then approaches the other (following) underwriters with a view to obtaining written lines of insurance which total 100% or more of the risk.
- Xchanging Ins-sure Services processes the slip and the broker adjusts or 'signs down' the lines if they have exceeded 100% of the risk.
- The premium is paid by the insured to the broker, who deducts any agreed brokerage fee and submits the net amount to Lloyd's Central Accounting (LCA) as part of a regular bulk settlement process. LCA allocates the premium to the managing agent of the syndicates involved.
Overseas clients
Lloyd's is licensed to do business in certain countries.
Information on Lloyd's current licensing arrangements
All US business underwritten at Lloyd's must be placed in accordance with US regulatory requirements and coverage must comply with local law. New insurance enquiries from US residents should be directed to an insurance agent or broker who is licensed to conduct business in the relevant state.
Insurance intermediaries
Lloyd's underwriters do not generally deal directly with policyholders. Instead, business is normally accepted by Lloyd's underwriters through the following intermediaries:
Lloyd's brokers - insurance business is generally brought to Lloyd's by Lloyd's brokers who are insurance broking firms accredited by Lloyd's to broke insurance business at Lloyd's.
Coverholders - Lloyd's underwriters may delegate their authority to enter into contracts of insurance to an intermediary known as a 'coverholder'. In such circumstances the general principle is that the coverholder acts as agent of the Lloyd's underwriters (rather than as agent of the policyholder).
Registered Open Market Correspondents - certain brokers are registered as Open Market Correspondents which permits them to negotiate contracts of insurance with the Lloyd's market. This may be directly with Lloyd's via a managing agent or through a Lloyd's broker.
Payments to intermediaries - intermediaries receive payments in a variety of ways, which may include the payment of commissions. Lloyd's strongly supports the disclosure and transparency of these commission arrangements. A policyholder may ask the intermediary with whom the policyholder deals for details of how and by whom the intermediary is being paid.
Ownership and other financing links to intermediaries
Under the terms of the Lloyd's Act 1982, Lloyd's brokers are prevented from being Lloyd's managing agents or being associated with managing agents. (Lloyd's underwriters accept business as members of syndicates each of which is managed by a 'managing agent').
Lloyd's also has risk management procedures in place in respect of the relationship between Lloyd's managing agents and any related companies that act as intermediaries. This is to ensure that the managing agent makes proper disclosures of any such arrangements. A policyholder may ask the intermediary with whom he is dealing to disclose if it is a related company to a Lloyd's managing agent.
Who insures with Lloyd's?
Lloyd's syndicates insure the world's leading businesses:
93% of Dow Jones Industrial Average companies
90% of FTSE 100 companies
1 FTSE 100, Dow Jones IA, Fortune Global 500, Xchanging Ins-sure Services, March 2005
Lloyd's is the world's leading specialist insurance market, home to 52 managing agents and 84 syndicates*, which offer an unrivalled concentration of specialist underwriting expertise and talent.
Lloyd's is the world's best known - but probably least understood - insurance brand. This is because Lloyd's is not an insurance company but a society of members, both corporate and individual, who underwrite in syndicates on whose behalf professional underwriters accept risk. Supporting capital is provided by investment institutions, specialist investors, international insurance companies and individuals.
Lloyd's brokers bring business to the market. The risks placed with underwriters originate from clients and other brokers and intermediaries all over the world. Together, the syndicates underwriting at Lloyd's form one of the world's largest commercial insurers and a leading reinsurer.
The market structure encourages innovation, speed and better value, making it attractive to policyholders and participants alike. Immediate access to decision-makers means that answers on whether a risk can be placed are made quickly, enabling the broker to provide fast, good value solutions.
This diagram is a basic representation of the structure of the market and its participants. A detailed description of the participants can be found below.
Members of Lloyd's
Members of Lloyd's, or 'capital providers' as they are often known, accept insurance business through syndicates on a separate basis for their own profit and loss (in other words, members of Lloyd's are not jointly responsible for each other's losses). The membership of Lloyd's comprises a mix of corporate (limited liability) members and individuals. Private members tend to support a number of syndicates, whereas some corporate members only underwrite through a single syndicate.
Syndicates
Lloyd's members conduct their insurance business in syndicates, each of which is run by a managing agent.
The syndicates operating within the market cover many speciality areas including:
Marine
Aviation
Catastrophe
Professional indemnity
Motor
Syndicates tailor solutions to respond to the specific risks of the client base.
Syndicates compete for business, thus offering choice, flexibility and continuing innovation. Syndicates cover either all or a portion of the risk and are staffed by underwriters, the insurance professionals on whose expertise and judgement the market depends.
Managing agents
It is the responsibility of the managing agent to employ the underwriting staff and manage the syndicate on the members' behalf. The managing agent must be a company specifically established for the purpose of managing a syndicate, and it may not carry out any other function. A managing agent may manage more than one syndicate.
Lloyd's brokers
Accredited Lloyd's brokers place risks in the Lloyd's market on behalf of clients. These brokers use their specialist knowledge to negotiate competitive terms and conditions for clients.
Currently there are over 181* firms of brokers working at Lloyd's, many of whom specialise in particular risk categories. Each Lloyd's broker is required to demonstrate an understanding of the Lloyd's market, as part of Lloyd's assessment of its suitability to be accredited as a Lloyd's broker.
Lloyd's operates an accreditation process for brokers seeking access to the Lloyd's market. All brokers must satisfy all relevant regulatory requirements. Lloyd's performs a careful assessment of all applicant brokers, affirming their reputation and financial standing and investigating the character and suitability of officers and employees before making the decision to accredit.
Local brokers
Any insurance broker can access the expertise and resources of Lloyd's by making contact with an accredited Lloyd's broker.
* as at 31 December 2009, including SPS and RITC syndicates. Source: Lloyd's 2009 Annual Report
The Lloyd's market brings together an unrivalled concentration of specialist expertise and talent.
It’s a society of members. There are 84* syndicates, which are run by 52 managing agents firms of highly experienced specialist underwriters, who accept risk on behalf of syndicate members.
Image correct at December 2008
Together, the syndicates underwriting at Lloyd’s form one of the world’s largest commercial insurers, and a leading reinsurer. But far more important than sheer size are the breadth and depth of specialist broking and underwriting expertise, brought together under one roof at Lloyd’s. That’s why we’re trusted to insure the world’s newest, toughest and most complex risks.
* as at 31 December 2009, including SPS and RITC syndicates. Source: Lloyd's 2009 Annual Report
