If you have any questions that are not covered by these FAQs or the Master/Group Policy Requirements and Guidance please contact the Lloyd’s Customer Oversight Team.
conduct@lloyds.com
In some cases all members of a group will automatically be covered by a master/group policy and in others they will have the choice to opt in. Both are acceptable.
No. For some master/group policies cover will incept and expire for all members of the group in line with the inception and expiry of the master/group policy itself. For others, cover for members will incept throughout the policy period as they join the group or opt in. Particular care must be taken to ensure good customer outcomes where the underlying coverage for a master/group policy does not have a common expiry date (further details are set out below).
Example 1: A sports club has a personal accident master/group policy in place to cover players when playing for the club. The club pays the premium and cover is automatic for anyone signed up as a club player. The policy period is 01/01/2023 – 31/12/2023. John signs up as a club player on 07/07/2023. He is automatically covered from 07/07/2023 and cover will expire on 31/12/2023, or move to a new policy if the club renews the master/group policy.
Example 2: A union representing occupational therapists purchases a master/group policy in order to offer personal accident cover to its members. Each member can choose to opt in at any time and will receive cover on an annual basis. The master policy period is 01/01/2023 – 31/12/2023. Simone qualifies as an occupational therapist in March 2023 and joins the union in May 2023. On 29/12/2023 she decides to opt in to the personal accident master/group policy. Her individual policy period is 29/12/2023 – 28/12/2024. Her personal cover will therefore expire almost a year after the expiry of the master/group policy.
It should be noted therefore that where a master/group policy is written under a binding authority not only may the master/group policy continue after the expiry of the binder (as would normally be the case with a policy written under a binder) but also the underlying coverages under the master/group policy may extend for a further period after the expiry of the master/group policy .
For example: A binding authority that permits the writing of master/group policies incepts 01/01/2023 and expires 31/12/2023. An opt in master/group policy incepts under the binder on 31/12/2023 with an expiry date of 30/12/2024. A member of the group opts in the master/group policy on 30/12/2024 and their period of coverage is 30/12/2024 – 29/12/2025. Therefore, a 2023 binder permitting annual policies may still be earning premium at the end of 2024 and providing cover until the end of 2025.
Managing agents should be mindful of the risks associated with master/group policies which do not provide for the underlying coverage to run to a common expiry date. Care must be taken particularly in relation to the expiry of a master/group policy written on this basis to ensure that Customers are treated fairly and continue to receive good outcomes, for example:
Example 1: A sports club has a personal accident master/group policy in place to cover players when playing for the club. The club pays the premium and cover is automatic for anyone signed up as a club player. The policy period is 01/01/2023 – 31/12/2023. John signs up as a club player on 07/07/2023. He is automatically covered from 07/07/2023 and cover will expire on 31/12/2023, or move to a new policy if the club renews the master/group policy.
Example 2: A union representing occupational therapists purchases a master/group policy in order to offer personal accident cover to its members. Each member can choose to opt in at any time and will receive cover on an annual basis. The master policy period is 01/01/2023 – 31/12/2023. Simone qualifies as an occupational therapist in March 2023 and joins the union in May 2023. On 29/12/2023 she decides to opt in to the personal accident master/group policy. Her individual policy period is 29/12/2023 – 28/12/2024. Her personal cover will therefore expire almost a year after the expiry of the master/group policy.
It should be noted therefore that where a master/group policy is written under a binding authority not only may the master/group policy continue after the expiry of the binder (as would normally be the case with a policy written under a binder) but also the underlying coverages under the master/group policy may extend for a further period after the expiry of the master/group policy .
For example: A binding authority that permits the writing of master/group policies incepts 01/01/2023 and expires 31/12/2023. An opt in master/group policy incepts under the binder on 31/12/2023 with an expiry date of 30/12/2024. A member of the group opts in the master/group policy on 30/12/2024 and their period of coverage is 30/12/2024 – 29/12/2025. Therefore, a 2023 binder permitting annual policies may still be earning premium at the end of 2024 and providing cover until the end of 2025.
Managing agents should be mindful of the risks associated with master/group policies which do not provide for the underlying coverage to run to a common expiry date. Care must be taken particularly in relation to the expiry of a master/group policy written on this basis to ensure that Customers are treated fairly and continue to receive good outcomes, for example:
- provision will need to be made for the handling of claims after expiry of the master/group policy
- it will need to be made clear to Customers that in spite of the expiry of the master/group policy the underlying coverage continues until its own separate expiry and that claims can therefore continue to be made until that time
- Customers will need to be reminded at an appropriate time that once the underlying coverage does expire (consideration should be given to the possibility that this may be some considerable time after Customers have been notified of the expiry of the master/group policy itself) that they may need to source their own insurance
- clear explanation will need to be given to Customers as to the applicable terms if the master/group policy is to be written by a different insurer on different terms
- steps will need to be taken to ensure that Customers who have paid premium in advance do not pay overlapping premium if the master/group policy moves from a different expiry to a common expiry date basis
Most master/group policies provide cover for individuals or micro-enterprises or sometimes SMEs. There is no prohibition on the provision of cover for larger commercial entities. However, where large commercial entities are involved it is likely to be more difficult to demonstrate that a genuine group exists and to meet the other master/group Policy Level Requirements. For example, larger commercial entities will usually require more bespoke underwriting than is permitted under a master/group policy. We recommend that extra care is taken to ensure that all the requirements are met when considering a master/group policy providing cover to larger commercial entities.
Provided that the employee group which will benefit from the master/group policy is clearly identifiable e.g. an income protection scheme for senior management or a travel policy for all sales staff, the genuine group requirement for a master/group policy would be met.
It is not considered appropriate for master/group policyholders to have claims or complaints handling authority because of the potential conflict between their position as the purchaser of the policy and the need to ensure fair and timely handling of claims and complaints. This risk applies equally in an employer/employee relationship.
A coverholder, broker or other insurance entity cannot enter into a master/group policy as the master/group policyholder in order to provide cover to their clients. It may purchase a master/group policy in the usual way to provide insurance benefits to its own employees.
Yes. Any arrangement that fits Lloyd’s definition of a master/group policy is a master/group policy for Lloyd’s Requirements and reporting purposes. If you are unsure about any arrangement, please speak to the Lloyd’s Customer Oversight Team.
No. As for all policies a master/group policy should have a conduct risk rating and the product should have been subject to a product review. Whilst your approach to conduct risk rating and product review for master policies should be aligned with your business’ approach for other methods of placement, both a conduct risk rating and a product review can be carried out at product level. However, each master/group policy should be checked annually to ensure that it continues to meet all the master/group Policy Level Requirements.
Value assessments should be carried out in line with your overall approach to product review and as such may be carried out at product level.
For many master/group policies, the coverage is designed specifically to address the requirements of the master/group policyholder. The master/group policyholder is therefore purchasing what it considers to be the most suitable product for its members and that it expects to provide value to its members. However, managing agents should not assume that just because the master/group policyholder has identified the coverage that they want that the product is therefore valuable. If there is evidence that the cover is not providing value, the managing agent should address this with the master/group policyholder. In so doing the managing agent should have regard to the financial sophistication of the master/group policyholder and its ability to determine what is appropriate for its members from an insurance perspective. Ultimately the managing agent should only write the master/group policy if it can satisfy itself that it is appropriate in all the circumstances. The POG process should assist in coming to this decision.
For example, in the case of an employer/employee relationship an employee might assume that a product is appropriate for them and will provide value because it is being offered by an organisation that it trusts. This is a risk that should not be overlooked, and caution should be adopted before placing too much reliance on the sophistication of the purchasing employer. Similar risks may exist for other master/group policyholders. Another consideration is that in some cases the master/group policyholder will not have knowledge of the claims/complaints experience and the insurer is therefore better positioned to assess value taking that information into account.
For many master/group policies, the coverage is designed specifically to address the requirements of the master/group policyholder. The master/group policyholder is therefore purchasing what it considers to be the most suitable product for its members and that it expects to provide value to its members. However, managing agents should not assume that just because the master/group policyholder has identified the coverage that they want that the product is therefore valuable. If there is evidence that the cover is not providing value, the managing agent should address this with the master/group policyholder. In so doing the managing agent should have regard to the financial sophistication of the master/group policyholder and its ability to determine what is appropriate for its members from an insurance perspective. Ultimately the managing agent should only write the master/group policy if it can satisfy itself that it is appropriate in all the circumstances. The POG process should assist in coming to this decision.
For example, in the case of an employer/employee relationship an employee might assume that a product is appropriate for them and will provide value because it is being offered by an organisation that it trusts. This is a risk that should not be overlooked, and caution should be adopted before placing too much reliance on the sophistication of the purchasing employer. Similar risks may exist for other master/group policyholders. Another consideration is that in some cases the master/group policyholder will not have knowledge of the claims/complaints experience and the insurer is therefore better positioned to assess value taking that information into account.
Yes. As the end Customer under a master/group policy is likely to be an individual, micro-enterprise or SME and because customer risk in a product risk assessment carries the greatest weight it is likely that master/group policies will be HPR (reflecting the rating of the product distributed under the arrangement). We acknowledge that the sales risk may be reduced where the master/group policyholder is a sophisticated purchaser of insurance though, as mentioned in the question above, caution should be taken in adopting this approach. Appropriate controls should be applied to meet the particular risk of the scheme in question and it would be appropriate in designing these to recognise the nature of the master/group policyholder.
Each application for an exemption will be considered on a case by case basis. At a minimum to grant an exemption Lloyd’s will need to be satisfied that a master/group policy is the most suitable arrangement for the business and that granting the exemption will not cause any detriment to the Customers. Lloyd’s has received requests for exemptions in relation to a number of the Policy Level Requirements including genuine group (Requirement 1) profit commissions (Requirement 3), shared aggregates (Requirement 7) and complaints handling authority (Requirement 9). Lloyd’s has granted exemptions for approximately 75% of the requests that have been received.