A Coverholder is a company or partnership authorised to enter into a contract of insurance on behalf of a Lloyd’s syndicate in accordance with the terms of a binding authority. The coverholder acts as agent of the Lloyd’s underwriters, rather than an agent of the policyholder.
Coverholders are Lloyd’s trusted distribution partners around the world. The strength of the partnership lies in the combination of the local business knowledge and strong relationships of the coverholder and the underwriting expertise and financial security of the Lloyd’s market.
Lloyd’s approves and regulates coverholders to ensure they uphold Lloyd’s high standards. Interested firms should contact Lloyd’s General Representative in Australia to discuss the requirements and process before applying.
To become a coverholder in Australia there are a number of requirements firms need to meet including:
- A sponsoring Lloyd’s broker and/or managing agent. The sponsor will perform their own due diligence of the application before it is submitted to Lloyd’s Delegated Authorities Team for review.
- All Australian coverholders must hold an Australian Financial Services Licence (AFSL) regardless of the type of business they are writing. Authorised Representatives of a coverholder must apply to become a coverholder in their own right, but can utilise the AFSL of their Licensee.
- All Australian coverholders must comply with all legal and regulatory obligations and meet the requirements of the General Insurance Code of Practice to which Lloyd’s is a signatory.
- Overseas coverholders can only write insurance business in Australia if they have applied to Lloyd’s for a regional extension to Australia. They are not permitted to write what is deemed ‘retail’ business under the Corporations Act 2001. A copy of the proposed policy wordings must be provided to Lloyd’s Australia prior to approval and the coverholder will need to advise how they intend to pay local taxes.
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