For professional indemnity (PI) risks the risk location may be determined by the following factors:
Whether or not a factor is relevant will be dependent on the countries/territories identified.
An Australian risk can be defined as a contract for the insurance of any other property or risk if the insured is a body corporate that has a registered office or principle place of business in Australia.
As one of the insured entities is a registered office in Australia, a regulatory risk location will arise in Australia.
Lloyd’s underwriters are licensed to write insurance in or from Australia (with the exception of certain classes). As this risk does not fall under the definition of retail insurance in Australia, the risk can be written by Lloyd’s underwriters.
EU insurance law which is applicable in France states that “a risk is located in an EU/EEA member state if relates to:
As one of the insured entities is an establishment situated in France, a regulatory risk location will arise in France.
Lloyd’s Insurance Company S.A. (“Lloyd’s Europe”) is authorised to underwrite all classes of non-life insurance on both a freedom of services basis and on an establishment basis.
A risk is deemed to be a Brazilian risk where the situs of the risk and/or the insured is located in Brazil.
As one of the insured entities is located in Brazil, a regulatory risk location will arise here.
Lloyd’s underwriters are not licensed to write insurance in or from Brazil. An exception that may be appliable is where there is no insurance coverage available in Brazil, provided the insurance operation does not infringe any law. The risk will need to have been presented to and declined by insurers licensed to write this type of risk in Brazil and the local regulator has established a procedure to follow. Please see Crystal for further information.
Should the risk not satisfy the requirements applicable to the exception, the risk could be considered on a reinsurance basis. Lloyd’s is registered as an Occasional Reinsurer in Brazil and this registration enables Lloyd’s underwriters to write most classes of reinsurance.
In addition to insurance activity, Canadian provincial regulations deem a risk to be a risk of that province if the insured is located there.
As there is an insured entity in Canada, a regulatory risk location will arise here.
Lloyd’s underwriters are licensed to write insurance in or from Canada, with some exceptions. All Lloyd’s business must be written on a regulated basis and meet the requirements to be “insure in Canada a risk”. Any business where the risk, insured or reinsured, is located in Canada must be processed through the AIF Signing Process System (ASPS). The exceptions to this are life reinsurance and business bound by Canadian domiciled coverholders or service companies where sufficient activity takes place in Canada for the business to be deemed “insure in Canada a risk”.
As defined in Singaporean legislation, a Singaporean non-life direct policy is one where the insured is a person resident in Singapore or has a permanent establishment in Singapore.
As the insured entity in Singapore is a permanent establishment, a regulatory risk location will arise here.
Lloyd’s Asia Scheme
The Lloyd's Asia Scheme permits Lloyd's underwriters to write Singaporean business locally through service companies in Singapore. Professional indemnity is listed as a permitted class of business in the Lloyd’s Asia Scheme Regulations.
Cross-border (from London)
Lloyd's underwriters are not licensed to write insurance from Singapore. However, Lloyd’s underwriters are able to write insurance from Singapore in limited circumstances, which includes:
An insurance contract underwritten at Lloyd’s should be arranged on a surplus lines basis if it meets the definition of risk location for the US which includes coverage purchased by a person (including a company or other corporate body) domiciled in the US.
As one of the insured entities is located in the US, a regulatory risk location will arise here. The specific US state will be determined by the home state rules.
Lloyd’s syndicates that have been approved by the National Association of Insurance Commissioners (NAIC) and appear on the NAIC Quarterly Listing of Alien Insurers are permitted to write surplus lines insurance in all US states and territories. Lloyd’s underwriters must adhere to the process for exporting business to the surplus lines market, including the diligent search requirement. Please note certain exemptions may apply to the US element of the risk. Please see Crystal for further information.
As there are multiple regulatory risk locations, the part of the risk located outside the European Economic Area (EEA), i.e. Australia, Brazil, Canada, Singapore and the US (California), can be written by Lloyd’s underwriters in London on an open market basis, using the Lloyd’s syndicate stamp. The part of the risk located in France can be written by Lloyd’s Europe on an open market basis, using the Lloyd’s Europe stamp.
As one of the insured entities is an establishment situated in France and there is a regulatory risk location in France, the part of the risk located in France must be written by underwriters seconded to Lloyd’s Europe branch in the UK or via an entity authorised to perform insurance distribution activities in the EEA. Additionally, any UK insurance intermediaries conducting distribution activity must be established and authorised in the European Union (EU).