Lloyd's offer

Lloyd’s is the world’s specialist insurance and reinsurance market, bringing together an outstanding concentration of underwriting expertise and talent. It is often the first to insure emerging, unusual and complex risks.

Around 80 syndicates are underwriting insurance at Lloyd’s, covering all classes of business. Together they interact with thousands of brokers daily to create insurance solutions for businesses in over 200 countries and territories around the world.

Lloyd’s insures the majority of FTSE 100 and Dow Jones industrial average companies. Lloyd’s enjoys strong financial security supported by excellent ratings.

• What does Lloyd's offer coverholders?

   Being a coverholder at Lloyd’s gives wide ranging benefits:

  Underwriting authority appropriate to expertise

  Coverholders are able to negotiate a level of underwriting authority appropriate to their level of expertise and ability. There are three levels of underwriting authority available to coverholder:

  • Full authority - authorised to write business and issue documentation within agreed parameters without referral to the managing agent.
  • Pre-determined risk selection and rates - authorised to write business and issue documentation using pre-determined rates provided by the managing agent or by reference to an internet rating system.
  • Prior submit - risk is referred back to the managing agent to underwrite insuring document issued by coverholder.
    

  Claims handling authority appropriate to expertise

  Where a coverholder has the necessary expertise and resources in its business, it is able to negotiate a level of claims handling authority.

  
  Flexibility and capacity to develop bespoke insurance solutions

  • The ability to work with managing agents and Lloyd’s brokers to develop innovative tailored products relevant to client needs in the local market.
  • To be able to offer insurance coverage where other insurers will not.
  • To have access to an alternative market with a variety of managing agents.

  
  Access to Lloyd’s brand

  • World renowned global brand, with an excellent reputation in the insurance industry and synonymous with being innovative and progressive.
  • Lloyd’s has been trading since 1688 and is known for its long standing tradition and its unique way of doing business.
  • One of the oldest and best known names in insurance.
  • As a coverholder you get access to the brand.

  More information about using the Lloyd’s brand
  

  
  Access to a range of insurance talent within the Lloyd’s Market

  There are 180 Lloyd’s brokers and 55 managing agents at Lloyd’s, all of which come together to provide a market place which allows Lloyd’s to provide insurance and reinsurance solutions to clients throughout the world.
  
  Coverholders get access to diverse products, provided by numerous different managing agents and Lloyd’s brokers, who they can work with to develop their business, across a range of different classes of business and geographies.

  
  Access to other markets through Lloyd’s licences

  Lloyd’s has 80 direct insurance licences, many of which can be used by coverholders to do business in other countries. By working with Lloyd’s, coverholders can expand their business internationally as well as operating in their own country. 
  

  Lloyd’s financial strength and security

  Lloyd’s unique capital structure, often referred to as the chain of security, provides excellent financial security to policyholders and capital efficiency for members. The chain of security provides the financial strength that ultimately backs insurance policies written at Lloyd’s and the common security underpins the market’s ratings and licence network.

  There are three links in the chain of security:

  • Syndicate level assets – the premiums received from policyholders
  • Members’ funds at Lloyd’s – the capital required to be lodged with Lloyd’s in support of the business plan
  • Central assets

   

  The funds in the first and second links are held in trust, primarily for the benefit of policyholders whose contracts are underwritten by the relevant member. Members underwrite for their own account and are not liable for other members’ losses. The third link contains mutual assets held by the Corporation which are available, subject to Council approval, to meet any member’s insurance liabilities.

  
   

  Lloyd’s financial strength ratings
  
  

  Three of the world’s leading insurance rating agencies validate Lloyd’s strengths, robust capitalisation and financial strength of the market. Lloyd’s currently holds A+ ratings from Fitch Ratings and Standard& Poor’s, and an A rating from A.M Best. The Lloyd’s financial strength ratings apply to every policy issued by every syndicate at Lloyd’s since 1993.

  

  Source: Lloyds; Date: Ratings correct as at September 2011

  
   

  Dedicated website for coverholders

  Coverholders have their own dedicated coverholder website within which provides information featuring:

  • Delegated authority news and coverholder related articles
  • Coverholder specific bulletins
  • Upcoming country events
  • Access to tools such as Atlas and Lineage
  • Access to resources such as model contracts of delegation

  
  Access to market intelligence

  There are five main intelligence products that are available to coverholders:

  Compare countries provides high level statistics across 200+ territories, on the economy, insurance market and Lloyd's business. This tool employs regional heat maps to showcase key indicators for a quick strategic overview.

  Country profiles provide individual summaries for Lloyd’s top 35 markets. These profiles contain factsheets on the economy, insurance market and Lloyd’s business and licence position.

  Market presentations contain local insights from Lloyd’s Country Managers as well as opportunities and challenges for Lloyd's in their markets.

  Country roundups provide summaries of recent industry news from Lloyd's Country Managers. These one-pagers contain snippets of insurers and reinsurers news as well as updates on distribution and local Lloyd's events.

  Class review provides in depth class of business intelligence on a market.  Initially, this is available for California, Texas, Florida and New Jersey.

  More about market intelligence 
  

  
  Access to model contracts of delegation

  To make life easier for coverholders, model contracts have been developed that meet the Lloyd’s requirements for a contract of delegation.

  More information on binding authority agreements

  
  Country manager network

  Lloyd’s coverholders have access to the country manager network across over 25 countries.

  The Lloyd's country manager represents and promotes Lloyd's in the country and has excellent local market knowledge and contacts to:
  
  - Facilitate meetings
  - Help on specific development initiatives
  - Run a range of Lloyd’s events in their country

  The country manager can meet with the coverholder to introduce key contacts or explain how Lloyd’s works.

  Country Manager Network
  
  

   

  Local coverholder networks
  

  Many country managers have coverholder networks and associations available.
  

  
  Access to events
  

  Lloyd’s runs an events programme all around the world. Coverholders have access to all these events and have the opportunity to discuss areas of mutual interest and share experiences.
  
  Find out more about Lloyd's events

  
  Coverholder e-newsletter
  

  In 2011 Lloyd’s introduced a coverholder e-newsletter which gives updates and news on key coverholder developments at Lloyd's.
  
  Sign up for coverholder email alerts

  
  Lloyd’s and London Market Introductory Test (LLMIT)
  

  There is comprehensive training and support available for coverholders who want a better understanding of Lloyd’s and the London market. Lloyd’s has the LLMIT which is a stand-alone qualification which members of staff can study for and sit in most parts of the world

  More about the LLMIT

• What expectations does Lloyd’s have of its coverholders?

  When Lloyd’s assesses an application from a new coverholder the following areas are considered:

  • That the coverholder is suitable and meet the Lloyd’s suitability criteria.
  • Ongoing, Lloyd’s also expects each coverholder to commit and contract to the way it conducts its business by means of the coverholder undertaking, which sets out the general principles of their relationship as an approved coverholder of Lloyd’s.
    

• Why does Lloyd’s approve coverholders?

  All Lloyd's coverholders require Lloyd's approval, including Lloyd's brokers who act as Lloyd's coverholders. Lloyd’s approval will typically initially permit a coverholder to accept risks and issue documentation on behalf of the managing agent only in the coverholders own territory.

  Lloyd’s approves coverholders because Lloyd’s wants managing agents to delegate underwriting, only to well managed and financially secure coverholders. This ensures that policyholders’ interests are properly protected and also protects and further improves Lloyd’s reputation in the local territory.

• What are the suitability criteria?

  In deciding whether to approve a company as a coverholder, Lloyd’s will consider the following:

  • The coverholder’s compliance with appropriate principles of good corporate governance.
  • The coverholder’s membership of any body or organisation deemed necessary or desirable.
  • The quality and adequacy of the coverholder’s human resources.
  • The quality and adequacy of the coverholder’s other resources.
  • The quality and adequacy of the coverholder’s controls and procedures to manage its business.
  • Whether the coverholder is of appropriate reputation and standing.
  • Whether any person who controls the coverholder, or is connected or associated, is of appropriate reputation and standing.
  • Whether the coverholder has adequate capital and financial resources.
  • Whether the coverholder has adequate professional indemnity insurance.
  • Whether the coverholder is capable and willing to comply with terms of any undertaking given by Lloyd’s.
  • Whether the coverholder possesses all the licences, approvals or authorisations in order to act as an approved coverholder wherever it will conduct insurance business in that capacity.

  Beyond considering these suitability criteria for a coverholder, the managing agent will also pay close attention to each of the following areas when deciding whether to issue a binding authority:

  • The quality and adequacy of the coverholder’s business plan.
  • The quality and adequacy of the underwriting function.
  • The quality and adequacy of the coverholder’s ability to operate a binding authority.
  • The quality and adequacy of the claims handling function (where applicable).
  • The coverholder’s reputation and standing.
  • The coverholder’s financial standing.
  • Financial crime.
  • The coverholder’s regulatory or licensed status.

  
  Details for each of these areas can be found in the delegated underwriting code of practice

• What is the undertaking?

  As part of the approval process Lloyd’s requires all coverholders to enter into a standard undertaking.
  
  The main purpose of the undertaking is to set out, in clear terms, the basic expectations Lloyd’s has of coverholders when they deal with Lloyd’s, their customers and clients, and Lloyd’s managing agents and Lloyd’s brokers. It also sets out the Lloyd’s powers relating to the operation of a binding authority or the ongoing approval of an approved coverholder.

• What is covered in the Lloyd's undertaking?

  Area	Why is that important?
  General (conduct and conduct of business)	The coverholder commits to deal with Lloyd’s in good faith and conduct their business appropriately.
  Underwriting Authority	The coverholder commits to only enter into contracts of insurance in accordance with their binding authority agreement and not to sub-delegate their authority.
  Administrative arrangements (including insurance monies)	The coverholder commits to organise and control their affairs responsibly and ensure that any insurance monies are held in accordance with the binding authority agreement and under local jurisdiction requirements.
  Dealing with customers	The coverholder commits to treating its customers fairly and only acting under the terms of the binding authority agreement.
  Dealing with the Lloyd’s market	The coverholder commits to deal with Lloyd’s market openly and in good faith and to comply with the binding authority agreement.
  Compliance with local requirements	The coverholder commits to comply with all relevant local insurance, fiscal, taxation and regulatory requirements and to notify Lloyd’s representative immediately of any failure to do so.
  De-registration or immediate suspension	The coverholder commits to comply with the binding authority agreements provision in relation to expiry, cancellation or termination of the binding authority agreement.
  Lloyd’s powers	It commits the coverholder to respond to requests from Lloyd’s or its representatives for information or documentation relating to the binding authority agreement.
  Miscellaneous (material changes or other significant matters)	It commits the coverholder to notify Lloyd’s representatives of any material changes to the coverholder application or other significant matters which Lloyd’s would expect notice of.
  Data protection	The coverholder confirms that they have read and accepted the terms regarding the use of personal and business sensitive data.
  Third party contract rights	The coverholder confirms that they understand that none of provisions of the undertaking are enforceable by anyone other than the Corporation of Lloyd’s.
  Governing law	The coverholder confirms their understanding that the undertaking and all matters relating to their application as a coverholder at Lloyd’s, shall be subject to the laws of England.

   

   

• How does the undertaking fit in with the binding authority agreement that the coverholder may have with a managing agent?

  Lloyd’s is not a party to the binding authority agreement that a coverholder enters into with a managing agent. However, it needs the ability to be able to step in to deal with issues as a last resort, for instance if the relationship between the coverholder and the managing agent completely breaks down. For this reason the undertaking is put in place.

  Lloyd’s interest here is to protect the Lloyd’s market, its reputation, its good name, compliance with the terms of its licences worldwide and its reputation for making sure that all valid claims are paid.
  

• What is Lloyd's looking for?

  Lloyd’s objective is to promote profitable underwriting from its coverholders, which means it is looking for companies made up of professional people with good business plans that are financially sound.

  Business activity	What is Lloyd’s looking for?
  High professional standards	- That the coverholder organisation and staff adhere to high professional standards to ensure there is no risk to the Lloyd’s brand, reputation and  licences. -  That the coverholder is competent, proficient and well run.
  Business plan	The coverholder has to prepare an underwriting plan for any proposed binding authority which will be reviewed by the managing agent to ensure that it fits with their strategy. This should include: Source of business Profitability Other contracts of delegation Analysis of market place Basis for selection of risks and pricing Performance against monthly targets How will the binding authority fit withinthe coverholders other areas of business
  Systems and IT	That the coverholder has the resources and systems for underwriting administration and for the administration and agreement of claims (where applicable).
  Business continuity planning	That there is a business continuity plan in place to ensure timely recovery in the event of a disaster and/or supply chain interruption.
  Regulatory and tax	Lloyd’s operates in a highly regulated market, where high standards are the expected norm, so Lloyd’s in turn expects the same from its coverholders. Audits of the coverholder will be conducted by either internal staff or an external auditor at specified periods, coordinated through the Lloyd’s broker. Coverholders can demonstrate the appropriate principles of good corporate governance. Coverholder can demonstrate knowledge of local relevant insurance, fiscal and taxation laws and requirements
  Conflict of interest	The coverholder has arrangements in place for identifying, resolving or managing conflicts of interest.