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Annual transfer

To ensure continuous contracts operate in a way that aligns with the Lloyd’s annual venture, it is important that the parties ensure that the mandatory provisions to be inserted into LMA 3113A are incorporated.  If a different binding authority wording is used, then these mandatory clauses must still be inserted in an appropriate manner.  In particular, the wording shown as Section 37A must be included without amendment, unless any amendment is agreed by Lloyd’s. 

The annual transfer of the continuous binding authority to the following year of account will take place as at 1 January year (in contrast to multi-year binding authorities, which transfer on the anniversary of the inception date).  This must not be changed.  Continuous binding authorities that commence mid-year will also transfer at 1 January and therefore the initial year of account period could be less than a full 12 months.

DCOM will allow continuous contracts to be registered and facilitate the contract having no end date.

Note that following discussion with Leading Counsel, Lloyd’s will not be undertaking an annual process, as presently with multi-year contracts, of requiring the managing agent of incoming years of account to sign a form agreeing to accept the transfer of the binding authority. In addition, there is no legal requirement for the contract to be endorsed to effect the annual transfer.  Instead, it is noted as follows:

  • It is the intention that the benefit (and burden) of continuous contracts, so far as concerns the subscribing underwriters, shall be transferred as and from 1 January each year to the underwriting members of the syndicate in the immediately following year of account (“the Incoming Underwriters”) in place of the subscribing underwriters (for these purposes “the Outgoing Underwriters”).  
  • Accordingly, in the absence of a written declaration made by the managing agent to the coverholder prior to 1 January in the year in question to the effect that the benefit (and burden) of the agreement is to remain with the Outgoing Underwriters after 1 January, the Incoming Underwriters are deemed to have accepted the transfer of the benefit (and burden) of the agreement as and from 1 January, without any further evidence of their assent to the transfer being required.

Lloyd’s will be monitoring the annual transfer process within the market and will update any guidance if needed in 2023.