Binding authorities need to comply with the requirements Lloyd’s sets. Details can be found in Market Guidance and Requirements for Delegated Authority. The LMA produces model binding authority agreements that the market may use and which are designed to meet those requirements.
Under this agreement, the Managing Agent delegates its authority to the Coverholder to enter into contracts of insurance underwritten by members of a syndicate it manages, in accordance with the terms set out in the agreement.
A Binding Authority Agreement (BAA) formalises this delegation and may also empower the Coverholder to issue insurance documentation on behalf of Lloyd’s syndicates. These documents include certificates of insurance, temporary cover notes, and other materials that serve as evidence of the insurance contracts.
Beyond issuing documentation, the BAA outlines the Coverholder’s additional responsibilities, such as handling premium payments and settling claims. This agreement—referred to as the contract of delegation—defines the roles, responsibilities, and obligations of all parties involved, ensuring clarity and alignment throughout the contractual relationship.
It is important to note that the Binding Authority Agreement does not itself constitute a contract of insurance.