Lloyd's underwriters do not generally deal directly with policyholders. Instead, business is normally accepted through the following intermediaries:
Insurance business is generally brought in to the market by brokers that have undergone the Lloyd's broker registration process. These are known as Lloyd's Registered brokers and they are able to do business with any Lloyd's syndicate providing they have a Terms of Business Agreement.
Any broker may deal direct with an individual syndicate providing the managing agent has carried out a process equivalent to the Lloyd's registration process. These brokers are known as non-Lloyd's registered brokers.
Lloyd's underwriters may delegate their authority to enter into contracts of insurance to an intermediary known as a coverholder. The general principle is that the coverholder acts as agent of the Lloyd's underwriters (rather than as agent of the policyholder).
Registered open market correspondents
Certain brokers are registered as ‘open market correspondents’, which permits them to negotiate contracts of insurance with the Lloyd's market. This may be directly with Lloyd's, via a managing agent, or through a Lloyd's broker.
Intermediaries receive payments in a variety of ways, which may include the payment of commissions. Lloyd's strongly supports the disclosure and transparency of these commission arrangements.
Lloyd's also has risk management procedures in place in respect of the relationship between Lloyd's managing agents and any related companies that act as intermediaries.