The new process and application form reduce the administrative burden placed on the market without impacting the protection of Lloyd’s licences.
All Lloyd’s coverholders (other than restricted coverholders) require Lloyd’s approval, including Lloyd’s brokers who act as Lloyd’s coverholders. A ‘standard’ approval permits a coverholder to accept risks and issue documentation on behalf of Lloyd’s underwriters in the coverholder’s own territory.
A coverholder cannot carry on business, on behalf of a Lloyd’s managing agent, in territories other than the one in which they are located unless they have the appropriate Lloyd’s territorial extension approval. A coverholder requires an extension to its approval beyond its own domicile if insureds of contracts arranged under its binding authority are domiciled or located in other countries, with the exception of the USVI, where coverholders must obtain regional approval for the USVI before they arrange contracts where either the risk is located or the insured is domiciled in the USVI.
The key changes are that Lloyd’s coverholder territorial extension approvals are no longer restricted to a single territory. Instead, most territories have been grouped into regions and approval is granted for the region. Also, Lloyd’s no longer requires coverholders to provide standard territorial undertakings or undertaking addenda. Instead, coverholders are required to comply with territory-specific conditions, as set out in Crystal: www.lloyds.com/Crystal
Lloyd’s categories of regional extension approval are:
Countries continuing to require separate approval
Australia
Canada
Switzerland
USA (all states and territories except US Virgin Islands)
US Virgin Islands
Approvals covering more than one country
European Economic Area (EEA)
Other licensed territories – not in the EEA or a country listed in section 1 above
Non-licensed territories – countries where Lloyd’s is not a licensed insurer
Worldwide approvals
Worldwide for marine cargo business
Worldwide for reinsurance business
Lloyd’s regional approval process is intended to protect the authorised positions of Lloyd’s underwriters internationally by facilitating regulatory compliance when coverholders are carrying on cross-border business. A coverholder who is accepting business from a territory other than the one in which they are located must, for every such territory, either possess the appropriate insurance intermediary regulatory status, or receive business only from intermediaries who do possess this status. The coverholder must also understand and comply with Lloyd’s own regulatory processes, as well as the legal, regulatory and fiscal requirements generally applicable.
