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.
A consortium will underwrite and bind specified classes of business produced from more than one Lloyd’s Broker (which is the main difference to a line slip). This form of delegation is permitted in accordance with paragraph 1(c) of the Intermediaries Byelaw. Service company Coverholders may also delegate underwriting authority to another service company Coverholder on the same basis (pursuant to a binding authority agreement) and where they do Lloyd’s will treat this as a consortium arrangement, which should comply with the requirements for such arrangements set out in this Code.
How do consortia work?
Authority is granted to a consortia leader/manager by the followers to be able to apply a single stamp that binds all consortia members. Historically, the process of granting a single processing number and “Lloyd’s Consortia stamp” by Xchanging has been a good way of allowing a single line to be applied for the whole consortia. It is also good marketing and allows processing efficiencies.
Once the market is set up for each stamp, with a unique identifying number (a 9000 series number) when the stamp is applied, each Syndicate participating in the consortia is shown within Xchanging systems with their percentage written/signed line. Underwriters apply their syndicate numbers at the same time under the 9000 number. The leader will apply the stamp when writing the business and the Broker presents the slip as usual to Xchanging for premium processing.
When Xchanging enter the 9000 number, it then auto-generates for the whole market and the premium flows through to these Syndicates automatically at the same time. There is no need for the Broker to produce bordereaux as it is processed exactly like an open market risk. However there are limitations: The 9000 series numbers are only able to be used in the UK and with strict year of account limitations and static market for the period of the contract.
Lloyd’s Delegated Authorities, Policyholder Protection & Third Party Oversight team no longer approve or require the market to provide details for 9000 processing numbers (often used for Consortia) where the 9000 number is used for a true Consortium. If you require a 9000 number for a Consortium, please go directly to Xchanging via enquire@Xchanging.com for registering.
Where a 9000 number is being requested for use for a Coverholder, please email Coverholders@Lloyds.com for approval of the 9000 number.