A coverholder is a company or partnership authorised by a managing agent to enter into a contract or contracts of insurance to be underwritten by the members of a syndicate managed by it in accordance with the terms of a binding authority.
Coverholders allow Lloyd’s syndicates to operate in a region or country as if they were a local insurer. This is achieved by Lloyd’s syndicates delegating their underwriting authority to coverholders.
A coverholder can have full or limited authority to underwrite on behalf of a Lloyd’s syndicate. It will usually issue the insurance documentation and will often handle claims. The document setting out the terms of the coverholder’s delegated authority is known as a binding authority.