Japan - Open Market Model

Lloyd’s underwriters are currently permitted to underwrite risks located in Japan on a direct basis in a number of classes (listed in Appendix 1). In accordance with Japanese regulations, all direct risks (other than aircraft, marine and travel packages) require a local policy to be issued and require premium to be received before inception. For Lloyd’s market participants, policy issuance can be arranged through Lloyd’s Japan Inc. (LJI), a wholly owned subsidiary of Lloyd’s, which acts as a local Coverholder for managing agents.

Lloyd’s underwriters who do not issue a local policy through LJI will require a local fronting arrangement.

For managing agents wishing to underwrite risks which are located in Japan but controlled outside Japan as being part of a global programme, the arrangements set out in this note establish a simplified process via LJI to issue local policies compliant with Japanese regulations - the Open Market Model (OMM). This is designed for the placements where the Japanese section of the risk forms parts of a multi-territory programme.

The arrangements outlined in this guidance note can be used for all Japan domestic risks, which:

• Are a part of a global policy not issued in Japan; and
• Are Japan risks controlled outside Japan (see below); and
• Are within one of the classes noted as “available for open market model” in Appendix 1 and the products licensed in Japan by LJI.

To qualify as a “Japan risk controlled from outside Japan” both of the following conditions must apply:

1. The head office or ownership of the Japan entity/risk is outside of Japan; and

2. The insurance purchase decision is taken outside of Japan.

Note that this arrangement may only be utilised by the Lloyd’s syndicates participating on the risk. LJI cannot issue a local Japan policy on behalf of non-Lloyd’s markets.

Contacts

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