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Consortium (Consortia)

What is a Consortium (Consortia)?

A consortium is a contractual arrangement under which one or more Managing Agents delegate authority under the terms of a binding authority agreement to another Managing Agent (the Consortium Leader) to enter into contracts of insurance on their behalf.

The difference between a line slip is that a consortium can involve more than one broker.

In practice, authority is given to a consortium leader by followers to apply a single stamp that binds all consortium members. If registered on Xchanging, a 9000/4000 number is issued that enables for premium to flow to all participating syndicates in their pre-agreed shares automatically.

This brings efficiency and ease of processing to all consortium members.

Why set up a Consortium?

Capacity Pooling

Consortia allows Lloyd’s syndicates to retain a competitive position in the market by pooling capacity and presenting a single front of large capacity to brokers and clients.

Emerging and 'Hard to Place' Risks

Consortia is an effective solution for brokers to place emerging, unique and ‘hard to place’ risks. Innovation is at the heart of Lloyd’s and consortiums give both syndicates.

Efficiency in Placement

Consortia provides for one point of transaction for brokers wishing to place a risk, instead of approaching multiple underwriters. This allows for rapid access to significant underwriting capacity for specialist areas.

How do I set up a Consortium?

Consortium arrangements take the form of binding authority agreements, and Lloyd’s with the LMA have published LMA3145A (Consortium Agreement) for use as a template in the London Market by Managing Agents. Service company coverholders outside of London are permitted to set up consortiums and Lloyd’s and LMA have published country-specific templates for Singapore and Australia. Note that consortiums outside of London will not benefit from automated processing.

In the London market

Once the terms of a consortium have been negotiated, should the consortium require automated premium and claims processing through DXC, the consortium would have to register with Velonetic. The process is simple, and a step-by-step guide can be found below. By registering a consortium with DXC, premium and claims processing is automated and a bordereaux is not needed.

Outside London

Consortiums will have to decide on premium collection and claims processing arrangements as part of negotiations. This is usually done by the consortium manager or the transactional broker on behalf of consortium members.

Innovation at the Centre of Consortiums

“Innovation, collaboration and expertise are pillars of the Lloyd’s market. As a market leader, consortia has allowed experts to deploy more meaningful capacity and generate more profitable returns for all participants. The consortium model not only enables us to provide innovative solutions and access to new capacity for brokers worldwide, but also underscores our dedication to making a meaningful impact on the cargo market, particularly in areas where essential goods face heightened risks. The success of Essential Consortium not only showcases the power of Parsyl's data-powered insurance solutions but also highlights the collective strength of the Lloyd's platform.”
Gavin Spencer, Chief Insurance Officer, Parsyl, The Essential Consortium
“We're delighted to lead the creation of this battery consortium with the support of the Lloyd's market, utilising our in-house risk management capabilities to ensure its viability. The work involved in managing lithium battery risks is extensive and brokers can now use this facility to gain access to capacity in this new risk area. The consortium provides brokers and insureds with a single port of call to bind these risks, helping to shore up the lithium battery supply chain as demand continues to grow."
Rob Wilson, Chief Underwriting Officer, Chubb Global Markets, Chubb Lithium Battery Consortium