Annual transfer

To ensure that continuous contracts remain consistent with Lloyd’s annual venture, it’s essential that all mandatory provisions are clearly defined within the contract wording. Despite being ‘continuous’ in nature, these contracts must still allocate premiums and claims based on the Year of Account basis.

There are two recognised methods for administering this:

1. Calendar Year Transfer (1 January)

  • The continuous binding authority should be transferred annually on 1 January
  • If the binding authority begins mid-year, the first Year of Account will be less than 12 months.
  • This approach allows for simpler long-term allocation of premiums and claims in line with calendar years.

2. Anniversary-Based Transfer

  • In certain situations, transferring on the anniversary inception date may be more appropriate.
  • This option is only viable where there are no Coverholder & Claims (C&C) numbers or Consortium stamps involved.

Important: Whichever method is chosen, the transfer date must stay consistent year-on-year, be explicitly stated within the contract wording, and be reflected in the bordereau. The bordereau must clearly identify which Year of Account premium is allocated to.

Note that following discussion with Leading Counsel, Lloyd’s will not be undertaking an annual process, as presently with multi-year contracts, of requiring the managing agent of incoming years of account to sign a form agreeing to accept the transfer of the binding authority. In addition, there is no legal requirement for the contract to be endorsed to effect the annual transfer.  Instead, it is noted as follows:

  • It is the intention that the benefit (and burden) of continuous contracts, so far as concerns the subscribing underwriters, shall be transferred as and from 1 January or anniversary date each year to the underwriting members of the syndicate in the immediately following year of account (“the Incoming Underwriters”) in place of the subscribing underwriters (for these purposes “the Outgoing Underwriters”).  
  • Accordingly, in the absence of a written declaration made by the managing agent to the coverholder prior to 1 January or anniversary date in the year in question to the effect that the benefit (and burden) of the agreement is to remain with the Outgoing Underwriters after 1 January or anniversary date, the Incoming Underwriters are deemed to have accepted the transfer of the benefit (and burden) of the agreement as and from 1 January or anniversary date, without any further evidence of their assent to the transfer being required.