There are three key ways in which the proposed amendments will affect Lloyd’s underwriters.
- It is proposed that the provisions for Lloyd’s currently contained in the legislation be removed from legislation and put into regulations. Lloyd’s has received confirmation that the intention behind this is simply regulatory efficiency and that, at this stage, there are no proposed changes to the Lloyd’s provisions. Any changes to Lloyd’s provisions will be subject to thorough review and consultation.
- The proposals seek to clarify the distinction between accident and health business, and medical schemes business. In particular, the proposed bill clarifies that, as currently, insurers operating under the Short-Term Insurance Act (including Lloyd’s underwriters) are unable to provide cover for any benefits, including medical expenses, that are ordinarily offered by medical schemes. In addition, insurers will be unable to provide stop-loss cover for medical schemes.
- It was originally proposed that the remuneration mechanisms for delegated underwriting be amended. This would have meant that agents with delegated underwriting authority would no longer be permitted to receive profit share, but would instead have to be paid at an agreed fixed rate. However, following intensive lobbying from respective stakeholders, the FSB agreed to review its proposal and has moved the relevant provisions from legislation into regulation, with a view to finalising the mechanisms following further consultation with industry.
The amendments are still being finalised. Lloyd’s continues to be involved in dialogue with both the FSB and the local insurance industry to ensure our trading status is maintained. We will keep you informed of any developments.
