Lloyd's has set out the process to be followed for international (non-UK) complaints in Market Bulletin Y4961 - International Complaints Handling: Expansion of New Procedures. For US complaints the process to be followed is modified in a number of respects as set out in Market Bulletin Y5019 - International Complaints Handling: USA. These changes reflect local regulatory and legal requirements and market practice.
Lloyd’s arrangements for international complaints are intended to allow for the oversight of complaints handling, consistent with the regulatory expectations of the UK Financial Conduct Authority (FCA), whilst allowing flexibility for managing agents in the way they handle complaints in accordance with local rules.
Guidance for US Coverholders and TPAs
Definition of a Complaint
A complaint is any written communication where there is an expression of dissatisfaction with an insurance product or service.
Definition of a Complainant
A complainant can be defined as any of the below:
- Personal lines policyholders (private individuals);
- Small commercial policyholders (where the policyholder has fewer than 10 employees and a gross revenue or annual balance sheet that does not exceed $2.5m);
- A charity which has an annual income of less than $2.5m at the time the complainant makes the complaint;
- A trustee of a trust which has a net asset value of less than $2.5m at the time the complainant makes the complaint
- Complainant eligibility for DOI differs for each State and so eligibilty will be assessed when a complaint is received from a DOI.
- Direct Complaints may be resolved informally if verbal resolution is reached within three business days.
- Direct Complaints (not resolved informally) should receive a written acknowledgement of the complaint promptly and, where possible, within three business days of receipt of the complaint.
- Direct Complaints (not resolved informally) should receive a full response to the complaint as soon as practicable and in any event within eight weeks of the complaint being received. Standard USA business practice is to issue a response within two weeks of a complaint being received and therefore in the event that a full response cannot be issued within four weeks the complainant should receive an ‘investigations ongoing’ letter explaining the present position and when the full response is anticipated.
- DOI Complaints should be dealt with in accordance with any directions of the relevant DOI for the handling of complaints. Please note all correspondence received from a DOI will be classified as a complaint.
External Dispute Resolution Service
When providing a full response to a Direct Complaint, the complainant must be informed that if they remain dissatisfied they may be able to refer their complaint to the appropriate DOI (or equivalent agency) for review and be provided with their contact details.
Notification of Complaints & Lloyd's Helpline
Notification email: firstname.lastname@example.org
Complaints helpline + 44(0) 207 327 5696
LMA Model Wordings
Frequently Asked Questions
Does the process mean that we are expected to change the way we respond to complaints from policyholders?
No. The new process is primarily a reporting process.
Local carriers do not ask for this information. Why are you?
We fully recognise that some of our compliance regulations may go beyond some requirements of local carriers. However, we have introduced a process that is as streamlined as possible and is based on US regulatory requirements. It should not change how you deal with complaints. We think it will involve very little additional work.
We do also believe that having complaints data shared between coverholder / TPA and managing agent is valuable and can lead to improvements in products and in the service the customer receives, to the benefit of policyholders and ultimately to the businesses at Lloyd's, including coverholders / TPAs.
Will managing agents want us to report all complaints we received including verbal complaints?
No. We have made clear to managing agents that only complaints received in writing (letter or email) need to be reported. This is consistent with the way in which US state insurance laws define complaints. If any managing agent asks for more please speak to your Lloyd's broker.
Also, the new requirements only apply to complaints from personal lines customers and some other small companies.
Do coverholders need to maintain a log of complaints?
Yes. In accordance with LMA model wording LMA5268 and LMA5269, coverholders are required to maintain a log of all complaints received.
Can managing agents ask for a regular copy of the coverholder's complaints register?
No. The LMA model wordings for coverholders, LMA5268 and LMA5269, state that coverholders shall provide a copy of their complaints register on request. This is intended to cover audits, reviews and exceptional circumstances only and is not intended to refer to regular reporting by the coverholder. The managing agent should maintain their own register of complaints and not rely on the coverholder for this.
We are a wholesale agent and we do not deal directly with the end policyholder. Do we need to ask the retail brokers to forward all complaints they receive to us?No. However, if a broker forwards on to you a complaint from a policyholder, then if that is a reportable complaint under our definitions, it should be reported.
We very rarely receive written complaints. Will we need to submit 'nil' returns to you?No. You will only need to report if and when you receive a complaint.
Do we need to report any non-Lloyd's complaints we receive?No.
If a policyholder writes to us objecting to a proposed change in the premium or coverage on renewal of the policy, is that a complaint?No. You are entitled to make changes to the basis on which you will provide coverage. If the policyholder writes to you disagreeing with the proposed change, that does not constitute a complaint.
If we receive a lawsuit should we regard that as a complaint and follow the complaints process?No. You should follow whatever process is usually followed in the event that legal proceedings are initiated.
If we receive a letter from the policyholder’s lawyer threatening a lawsuit should we regard that as a complaint and respond as such (and report that to underwriters)?
Where there is a threat of litigation (including if you receive a Civil Remedy Notice or Pre-Suit Notice) we recognise that you will need to respond in a way that appropriately protects all legal rights and that therefore you may not want to provide a full written response to the complainant. There is no requirement to notify these to Lloyd’s. In the event that we are notified of a CRN directly, we will forward this onto the relevant entity and ask for the lead syndicate to be made aware. Once this has been confirmed we will close this down as an enquiry on our system.
Will we need to treat as a reportable complaint from a beneficiary under master policy?Yes, a certificate holder under a Master Policy must be treated as a complainant and the same process must be followed as for personal lines policyholders.
Will we need to treat as a reportable complaint a complaint from a third party claimant?No (unless the complaint is referred to you by a state Department of Insurance (or equivalent agency)).
What will underwriters and Lloyd’s do with this complaints data? Will you use it as a reason to cancel our binding authorities?No. Receiving complaints is a normal part of any business and is not, of itself, a matter of concern. What is important is that the coverholder / TPAs and the managing agent identify and learn from complaints. Whilst we will use the data to monitor the market and spot any outliers, we do not intend to use the data to direct that binding authorities are cancelled (other than in the most extreme circumstances). The data is also required by Lloyd’s for the purposes of providing complaints data to the UK Financial Conduct Authority (FCA).
You have said that you will need copies of our full response to the complainant. But sometimes we will respond to the complaint over the phone without any written record. Will that still be permitted?
Yes. If complaints are to be responded to verbally we would expect that they are on the lower end of the scale of customer dissatisfaction and should, as a result, be answered within three business days. Anything beyond three business days should receive a full written response. When a complaint is resolved verbally you do not need to give the complainant details of the relevant Department of Insurance; that only applies to written responses.
If a complaint is resolved verbally, you will need to provide a summary of the outcome to Lloyd’s, including details of any redress provided (and send a copy of that to the managing agent of the lead syndicate, via your Lloyd’s broker).
You have said that we would need to notify Lloyd’s upon receipt of a complaint as well as once a complaint is concluded, sending the actual complaint along with the response. If we get a complaint and respond to it say within three days, is it necessary to notify you and then send the response separately?No. Just send the complaint and your response at the same time as you send the notification using the Lloyd’s Complaint Notification Template. Also if you can deal with the complaint within three days you won’t have to send the complainant a separate acknowledgment. Complaints have to be notified to Lloyd’s within two weeks of receipt so in many instances you will hopefully be in a position to provide the complaint and your response at the same time as notifying Lloyd’s of the complaint.
Does any of this impact on how we deal with complaints that are referred by a policyholder to the DOI to investigate?
No, they should continue to be dealt with in the same way as present. Whilst Lloyd’s will generally be contacted directly by the DOI in these circumstances (and will as a result, facilitate the sending of a response), we would ask that you inform Lloyd’s of any complaints you receive directly from any DOI, using the Lloyd’s Notification Template, as soon as you can and provide Lloyd’s with a copy of the complaint and the response (copied, via your Lloyd’s broker, to your managing agent).
I don’t want to send this template directly to Lloyd’s. Can I ask the managing agent of my lead syndicate to prepare it for me and submit it?
Yes you can. But if you do agree that with your managing agent, it is important to note that Lloyd’s must receive the template in the format we have developed. Therefore you will need to provide the necessary information to the managing agent so they can prepare and submit the return.
What Complaints Notice are we required to use for Lloyd’s Generic Certificate Schedule / Declaration Page - LMA3136S – Sections 5?
This section should not be completed for US policyholders with the exception of those States that have specific complaint notice requirements ie California and Texas and Illinois licenced business. Further information regarding these requirements can be found on Crystal.
Should we follow this process for complaints relating to large risks and policyholders that are not in-scope.
No. This process must only be used for policyholders that are in-scope.
Is there a model wording for use in TPA agreements?
No. You should adapt the LMA model wordings for coverholders :