This is an extract from the code of practice (delegated underwriting) explaining insurance documentation:
7.1 Introduction
The managing agent must be satisfied with the format and content of the insurance documents the coverholder will issue under the binding authority. It is essential that the managing agent clearly sets out the coverholder’s responsibilities and set appropriate service standards relating to producing and issuing insurance documents.
To satisfy Contract Certainty requirements with regard to the timely delivery of insurance documents, managing agents should require each coverholder to confirm that insurance documents have been issued within required timescales.
The form and frequency of this return from coverholders should reflect the managing agent’s assessment of risk, while ensuring that returns are received at least annually from each coverholder.
7.2 Content of insurance documentation
Insurance documentation evidencing contracts of insurance issued by an approved coverholder or by a restricted coverholder must include the following information, provisions and terms:
Table 7.2
(a) the name and address of the coverholder;
(b) all relevant terms and conditions that relate to the contract of insurance entered into by the coverholder including:
(i) relevant wordings, exclusions and limitations;
(ii) the maximum period of cover; and
(iii) the limits of liability.
(c) the amount of the premium and any other information relating to the cost of the contract of insurance that is required by applicable laws or requirements to be disclosed;
(d) information about the procedures for handling claims arising under the contract of insurance and for the resolution of complaints;
(e) the law and jurisdiction applicable to the contract of insurance; and
(f) any other provisions required under the laws or requirements of the jurisdiction in which the contract was concluded, where the insured is domiciled or of any other relevant jurisdiction and any other provisions as required by the relevant representative or agent of the Society.16
The managing agent must also ensure that every insurance document issued to a policyholder contains an appropriate several liability clause. This applies whether or not the binding authority is entered into by one or more syndicates and whether or not there is any non-Lloyd’s security on the binding authority.
The certificate issued must have a consistent standardised referencing system whereby individual certificates can be traced back to a particular binding authority. This may be the UMR as per the binder, or another similar referencing system. In most territories there are requirements governing how the insurance should be sold to policyholders (for example, in the UK there is FSA and ABI guidance). It is essential that the managing agent is satisfied that the insurance to be sold by the coverholder on underwriters’ behalf complies with any local regulatory requirements.
