FAQs for managing agents:
Q. Why are these changes being made?
A. Following the successful implementation of the Contract Certainty campaign our intention is to ensure that slips are of appropriate quality in all regards, pre-bind. In recent years a declining percentage of slips have gone for XIS stage 2 checks, which are in any case too late in the process to be relied upon. Hence the changes that have been made.
Q. What is Lloyd’s doing to help managing agents?
A. Lloyd's has worked with the market to develop clear guidance on how to manage PBQA risk as well as delivering the QA Tool and other services including Crystal (source of tax and regulatory information.)
Additionally we have worked with organisations across the market to raise the profile of this challenge.
Q. How should managing agents have revised their procedures?
A. Managing agents should have made their own assessment of risk regarding the checking of slips. Based on their assessment each managing agent should have set out their own PBQA procedures and be checking that they are followed. By way of example, this could involve the earlier receipt of slips for review, use of the QA Tool, or the use an external checks service provider. Please use the guidance within the market bulletin Y4015.
Q. What if I am not the lead underwriter?
A. Every Managing Agent has had to assess the risks presented within follow, as well as lead business. There are no requirements laid down as to how this must be done. Please review the guidance notes within the circulated Market Bulletin (Y4015).
Q. Are all London Market insurers adopting broadly similar procedures?
A. Lloyd’s/LMA have worked closely with the LMBC and IUA and all parties are committed to the achievement of quality. How this is achieved may differ, although liaison should avoid disruption to business acceptance.
Q. What is Crystal? Do I need to use the QA Tool as well?
A. In essence the QA Tool identifies high level Tax and Regulatory requirements for each slip reviewed, while Crystal provides the detail of those requirements, by territory.
Q. Does every slip need to be checked in the same way?
A. Not necessarily. Underwriters are encouraged to take a risk based approach, assessing each slip accordingly.
Q. Should Lloyd’s followers make the same checks that leaders have already made?
A. This is not a requirement. It will be for each Lloyd’s follower to consider the leader's procedures and respond for themselves accordingly.
Q. What were the most common reasons for query or rejection of slips by XIS, under the stage 2 checking process?
A. XIS have reviewed queries/ rejections from Q1 2007 and the following aspects have required further attention:
- Policy & slip mismatch - where the wording/policy does not reflect the slip
- Lines clause frequently incorrect
- Law and Jurisdiction is not correctly stated in the policy (as per instructions from the LMA)
- Leader amendments on the agreed wording are not incorporated in the policy Conflict of clauses used in the agreed wording
- Excess and deductibles are not always clear
- Schedule not completed accurately as per the slip
- Legislation requirements are not complied with
- Incorrect cancellation terms for war
Q. How will Lloyd's follow up the 'fact find' visits to all managing agents?
A. These visits were completed prior to 1 July change and as expected Managing Agents were reviewing, or planning to review, their PBQA procedures. As part of our oversight of underwriting performance your dedicated contacts in Franchise Performance and Operational Risk will be following up the visits to understand how individual firms have decided to manage the risks that they face. In the meantime if you require any assistance please do check out the lloyds.com PBQA section, or get in touch with your usual contacts at Lloyd's.
FAQs for brokers
Q. How can brokers assist in the Pre-Bind Quality Assurance process?
A. Brokers have a key role here. In addition to the Contract Certainty checks which should already be made, ensuring that slip details are complete and correct (ie tax & regulations and Lloyd’s Advisory/ Risk Management) will be of considerable assistance to underwriters. It would be helpful if brokers and managing agents agree how best to address the PBQA aspects, alongside other underwriting procedures. For example, allowing sufficient time for PBQA checks to be made.
Q. Can brokers make all of the checks before presenting slips to managing agents?
A. A number of brokers are intending to use the QA Tool in this way. Although managing agents will still need to assure themselves that the slip is of adequate quality, having checks completed in advance should be of considerable assistance.
