Find a Lloyd’s broker to help support your application
You can do this by using the Lloyd's Broker Directory.
Coverholders
About Coverholders
Delegated underwriting refers to an arrangement under which a Managing Agent of a syndicate delegates its authority to a company or partnership to enter into contracts of insurance on behalf of the syndicate.
What is a Coverholder
“Coverholder” means a company or partnership authorised by a Managing Agent to enter into a contract or contracts of insurance to be underwritten by the members of a syndicate managed by it in accordance with the terms of a Binding Authority. Our Definitions Byelaw provides definitions of the various terms and expressions used across Lloyd’s.
The role of a Coverholder
When a Lloyd’s Managing Agent delegates its authority to an approved Coverholder under a Binding Authority, the approved Coverholder may enter into contracts of insurance and issue insurance documents as evidence that contracts of insurance have been accepted.
An approved Coverholder will normally also be allowed to collect premiums, and may be allowed to handle claims or perform other functions. The scope of its authority will be set out in the contract called the Binding Authority agreement.
What is a Binding Authority?
A “Binding Authority” is an agreement between a Managing Agent and a Coverholder under which the Managing Agent delegates its authority to enter into a contract or contracts of insurance to be underwritten by the members of a syndicate managed by it to the Coverholder in accordance with the terms of the agreement.
Understanding the terminology
There are several resources available providing definitions of the various terms and expressions used across Lloyd’s.
The benefits of Coverholder arrangements
The Coverholder model is a proven and successful way of placing business with Lloyd’s, providing benefits to each of the parties involved.
Benefits of being a Coverholder
Coverholders benefit from partnership with Lloyd’s syndicates by gaining access to Lloyd’s excellent brand, security and ratings, as well as access to experienced Underwriters and Brokers. Coverholders may therefore offer a wide range of specialist classes of business underwritten at Lloyd’s, for example personal accident cover for sports people and specialty liability insurance.
Benefits of placing business with Lloyd’s Coverholders
In addition to the above benefits, placing business with Coverholders provides a more cost effective means to access Lloyd’s than on an open market basis.
Benefits for Lloyd’s syndicates
Coverholders enable syndicates to underwrite locally without the need for expensive local infrastructure. The key to this is finding Coverholder partners with the right experience and quality. These businesses will usually have considerable expertise in particular niche products and regions and have excellent local relationships. They can also help develop new products in partnership with Lloyd’s Syndicates and Lloyd’s Brokers. Lloyd’s keeps a directory of all of its Coverholders which will tell you which Lloyd’s Coverholders are approved in your country. In order to find a local Coverholder for a specific class of business, it would be beneficial to contact a Lloyd’s Broker who deals with Coverholder business. You can find a directory of Lloyd’s Brokers online.
Becoming a Coverholder
First steps
1.
2.
Find a Lloyd’s Managing agent to sponsor your application
You can do this by using the using the Managing Agent directory.
3.
Register for Atlas
The broker (or the Managing Agent if dealing directly) will set up your application on Atlas. Once this is done the applying entity will be given a unique Atlas pin. Atlas is the online market system for the process of managing Coverholders.
You will then need to register for access to Atlas.
Expectations
It is Lloyds expectation that the applicant must not:
- Use 1 lime street as a coverholder address; this should be the address registered to the applicant's business with the local regulator
- Have Lloyd’s in their legal and/or trading name
- Use any Lloyd’s branding before full approval is issued
- Follow branding guidelines post approval
- Have a trading name that is a separate legal entity
- Use the word “compliance” in the legal name
- Use a different legal name as to what is on the applicants license
What you will need
Lloyd’s will carry out an extensive review of your application. The following is not an exhaustive list of requirements but the key components and documents that we recommend you consider gathering in advance of your application.
1.
Licence
As well as a licence from your local regulator please also check Crystal to determine whether your business can be written on Lloyd’s licences. You may also wish to use Crystal to check if there are any territory specific restrictions on the type of business that can be written, or the distribution methods. Some territories require specific criteria to be met before any Lloyd’s business can be written.
2.
Professional Indemnity
A policy which is in date and covers you for binding authority activities such as ‘Managing General Agent activities’.
3.
Financials
Your most current profit and loss statements and balance sheet, or a balance sheet and a 3-year profit and loss forecast for start-up’s.
4.
System
An end to end quote and bind system which can do the following:
- Record premiums and claims for individual insurance policies;
- Produce standardised insurance documents complying with Lloyd’s and local regulatory requirements;
- Produce bordereaux that satisfy managing agents’ and Lloyd’s V5.2 requirements and regulatory obligations (e.g. tax);
- Maintain accurate credit control systems;
- Record and monitor premiums against aggregate limits and maintain controls to prevent them being breached;
- Monitor and report on compliance to policy document issuance service standards.
5.
Business Plan
A formal business plan on headed paper which covers in sufficient detail the following:
- Company profile;
- Where your business comes from;
- The rationale for choosing Lloyd's;
- Your target and past/historical profitability, explaining how the target profitability ratios will be achieved;
- Any reasons for previous insurer declining to renew;
- Territories and distribution channels;
- Details of other contracts of delegation you manage;
- An analysis of the market (including opportunities for, and threats to, successful underwriting and key competitors);
- Basis for choosing risks and setting prices;
Throughout the application process your sponsoring broker and managing agent will work with you to complete the application on Atlas. The above will all be required as part of the application that is submitted to Lloyd’s for approval.
6.
Bank accounts
There are two options for bank accounts, to update or to add a new bank account. Updating the account will enable the user to edit the details of the current account such as address or account number. This button will take you straight to the bank accounts change form and will bring through the data already held for that policy.
Account details must be provided for all insurance and claims accounts for Lloyd’s Binding Authorities. Two signatories for each account must be provided.
Separate Accounts: There should be separate accounts for insurance and non-insurance monies. If the Coverholder has claims authority there should also be separate accounts for claims monies. These accounts should be listed.
New Bank Accounts: Selecting add new bank account will enable the user to add details about a new account. This button will take you straight to the bank accounts change form.
Trust accounts: Lloyd's expects insurance monies to be held in trust accounts whenever this is possible in the relevant territory. Where a trust account is not used please explain how the account is set up.
Sweep accounts: Lloyd's does not expect insurance monies to be held in sweep accounts. If a sweep account is used please provide details.
Signatories: Lloyd's would expect for there to be at least two signatories listed for each account.
Documents: Documents can be attached to support the information on this page.
This section can be updated by the Coverholder, Lloyd's registered Broker or direct-dealing Managing Agent.
The task is a zero stage change task. This means that a stakeholder is not required to authorise the change and the information is written directly to the database. The information will be immediately viewable under the details tab.
Please note: if a Coverholder is located in a country where trust accounts aren't recognised, confirmation will need to be provided to Lloyd's that the accounts of the Coverholder are not sweep accounts.
7.
Lloyd's Europe applications
Lloyd's Europe applications submitted without the appropriate licences from the local regulator can only be approved in principal until the requisite licences are obtained. If you have any further queries regarding Lloyd’s Europe coverholder applications please contact us.
Application process
Full Application
Any company who wishes to bind insurances and/or issue documents on behalf of a Lloyd's underwriter must first be approved to act as a Lloyd's Coverholder by completing the application process. Each applicant requires a sponsoring Lloyd's Broker and Managing Agent, who perform their own due diligence of the application before it is submitted to the Lloyd's Delegated Authority Team.
Branch Application
A branch application can only be submitted where the legal entity is identical to an existing approved coverholder. This does not include subsidiary companies and or sister companies within the same group. If the application is for an entity in the same group but with a different legal name, a full application must be submitted.
Delegated Authority resources
Explore the resources available to support Delegated Authorities.
Back to Delegated Authority