As master/group policyholders are the purchaser of the policy it is not appropriate for them to have any claims handling authority because of the inherent conflict of interest.
In addition, and on a practical level master/group policyholders are unlikely to be set up to handle claims and any claims handling would entail a need for far greater oversight of the master/group policyholder than is typically provided by managing agents.
We recognise however that in some cases master/group policyholders may be best placed to receive claim notifications where the ongoing relationship between the master/group policyholder and the Customer may mean the Customer will find it easier to notify claims to the master/group policyholder. For example, a union that purchases a master/group policy for its members and provides a helpline for its members may identify claims in the course of assisting members. It then makes sense for them to pass the notification on to the managing agent or delegated claims administrator.
Where a master/group policyholder is able to receive claim notifications managing agents need to be satisfied that there are robust processes in place in ensure all claims are reported in a timely way. Expectations regarding receipt of notifications, forwarding of notifications and timeframes for doing so should be set out in the master/group policy wording.
Where a master/group policyholder can receive claim notifications the customer documentation should still include an option to submit claims directly to the managing agent or its coverholder or delegated claims administrator.
When it comes to claims payments, we would not usually expect these to be paid via the master/group policyholder. This would again create requirements for additional oversight to ensure that payments are reaching the Customer. However, in some cases it may be appropriate and this should be discussed with Lloyd’s.
A master/group policyholder may choose to keep a retention, where it is permissible under local laws and regulations. Where this is the case the master/group policy should be clear that all claims will be handled in accordance with the policy wording regardless of whether the claim falls within the retention or not. This is to ensure that Customers can rely on their evidence of cover to understand the cover in place and that they will not be treated differently depending on whether their claim falls within the retention or not. Ideally the same DCA would handle all claims, regardless of whether they are within the retention, and coverage decisions would be referred to the insurer. The only difference in the treatment of claims below and above the retention should be that claims below the retention are funded by the master/group policyholder and claims above the retention are funded by the insurer. Where a master/group policyholder wishes to retain independent decision-making authority within the retention the potential impact on the Customers should be carefully considered and the arrangement should be discussed with Lloyd’s. Complaints regarding claims within the retention are unlikely to fall within the managing agent’s jurisdiction but they should ensure they are made aware of any such complaints and we would encourage managing agents to assist the master/group policyholder in responding to any such complaints to ensure that complaints and claims are handled consistently.