Delegated Authority Guidance

In June 2024 Lloyd’s released a market bulletin communicating new requirements for policy documentation issued under delegated authority agreements. The bulletin details that we expect all delegated authority agreements incepting on or after 1 July 2025 must require that details of the Lloyd’s lead are specified in the policy documentation provided to the insured. To support these new requirements we have created some FAQs in collaboration with the market.

These FAQs will be updated accordingly if any additional questions or topics are raised from the market. Please contact us should you have any questions on this. 

Validation of binding authority via Letter of Authority

Lloyd’s have collaborated with the LMA to produce a template that can be utilized by the market, where confirmation that a specific binding authority is in place, is required. This template is referred to as a ‘Letter of authority’.

The template is available for all managing agents however it is appreciated that some managing agents may already have their own template which can still be utilized. To drive consistency within the market, the letter of authority template can be found below. For Lloyd’s Europe, there is a separate Letter of Authority template which can also be found below.

Retrospective endorsements are endorsements where the date inserted for when the endorsement takes effect is prior to the date that there is full and final agreement of the terms, as evidenced by all the parties signing the endorsement.

Lloyd’s has put together some guidance which outlines best practice as well as the process for administering these types of endorsements for binding authority contracts. We recommend managing agents familiarise themselves with this guidance, the new process we will be rolling out for 2024. Please note that the new process for registering retrospective endorsements on DCOM must be followed by all managing agents from 1st January 2024.

Operational Resilience (OR) is a Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) requirement. The requirement is being introduced to ensure that financial services organisations can operate in a resilient and robust way should disruption occur, plans are in place to minimise this for customers/policyholders and recover in a reasonable timeframe.

Lloyd’s have collaborated with the LMA to produce guidance material for all in scope Coverholders (CH) and Delegated Claims Administrators (DCAs). They will be required by their Managing Agent to complete an operational resilience questionnaire that has been designed by the market to allow them to better understand the CHs/DCAs current approach to being operationally resilient, and to gather information on any gaps of Operational Resilience the CH/DCA currently have in withstanding disruption to Important Business Services (IBSs), that would cause intolerable harm to customers should that disruption occur.