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Frequently Asked Questions

The preliminary estimate range of $3bn - $4.3bn was derived from the loss estimates submitted by managing agents as part of the Second Major Claims Return for COVID-19. The preliminary estimate considers potential exposure associated with COVID-19 where affirmative coverage may be provided, assuming that material social distancing rules and restrictions persist regionally and/or globally until 30 June 2020. The estimate considers submitted totals for this scenario together with estimated downside uncertainty. The range is net of reinsurance recoveries.

As reported in the Half Year Results for 2020, Lloyd’s has incurred COVID-19 losses as at 30 June 2020 of £2.4bn and the estimated net ultimate loss to the Lloyd’s Market is expected to be £3.0bn. Reported losses are in line with the preliminary loss estimate figures for COVID-19 published May which projected that Lloyd’s is set to pay out in the range of £2.5bn to £3.5bn to its global customers, as a result of the far-reaching impacted of COVID-19.

Read the full details of the loss figure announcement in our press release
Read the full details of the Half Year Results 2020 online

Underwriting Room and Emergency Trading Protocol

We have put in place an emergency trading protocol to supplement face to face and electronic trading to ensure that all necessary insurance and reinsurance business can continue. The market’s developing use of electronic placement through recognised electronic placement systems (e.g. PPL) provides a secure and sound method of submitting, negotiating and binding the placement and endorsement of insurance contracts. These mechanisms are being used wherever possible to replace face to face trading.

It is very encouraging to see a significant increase in electronic trading; the number of unique users on the platform has risen by 40% since 14 March according to a PPL update on 6 May.

The Emergency Trading Protocol is only to be used in in the eventuality it is not possible to transact business face to face or via a recognised electronic placement system (eg. PPL) as per the ETP March 2020 v.2. The Emergency Trading Protocol will stay in force for an as-yet undefined period of time when The Room is reopened in September whilst we seek a better understanding of the market’s requirements and how we can best support non face-to-face trading throughout the continuing period of disruption.

We’re reopening the doors of the Underwriting Room on 1 September 2020. Our number one priority is keeping the market and our employees safe, so we have allowing the market and your employees to connect and collaborate safely and productively. To do this we have introduced a number of new policies and procedures in place to ensure this.

Although the Room will look a little different for a while, we feel confident that the right systems solutions are in place to ensure that face to face business in the market can continue efficiently, effectively and safely.

Find out more about our return to the Underwriting Room

We have published our return to the Underwriting Room guidance with the market. This details the processes and procedures we have implemented to ensure that the building is COVID-19 secure.

You can download this guidance from our welcome back to the Lloyd's building page

If you are a managing agent or a broker and require further information, please contact us at businesscontinuity@lloyds.com.

There is no objection to using electronic signatures as such and the electronic placing systems operate by means of electronic signature. The ETP however, provides for binding to be effected by exchange of emails so if electronic signatures are to be inserted it would be important not to do it in a way that cut across the protocol set out in the ETP where it is expression in email of the offer and acceptance that is the active element.

Delegated Authority guidance

As with policy renewals, we are aware that there are currently challenges in completing the renewal of binding authority arrangements and we would say again it is preferable that binding authorities are renewed rather than extended. However, where current operational restrictions impede the ability to effect renewal then underwriters should consider an extension to the binding authority. Underwriters may give such an extension even if this extends the overall binder period to more than the current limit of 18 months (or 36 months if a three-year binder). You can find out more in our delegated authority guidance section.

Whilst we have to be pragmatic in these times it is essential that policies continue to be issued in line with local regulatory requirements.

Where the local regulation has been temporarily revised in response to current circumstances and these now provide the Coverholder with longer timeframes than the Lloyd’s minimum standard, then it may be appropriate for a managing agent to adjust your oversight to monitor that the local

regulatory standards are achieved and have an appropriate plan to ensure that Lloyd's minimum standards are achieved as soon as possible.

Where revisions to local regulatory requirements have not been made and in circumstances where the Coverholder is unable, at present to meet the Lloyd’s minimum standard even when allowing for a short, reasonable extension, then the managing agent should discuss this with their Lloyd’s Customer Oversight Manager.

If you are a coverholder who cannot meet the agreed policy issuance timeframes then you should contact your managing agent as soon as possible to discuss the appropriate course of action. If you are a policy holder who has not received your policy then you should contact your broker directly and raise this with them. Should you not be able to resolve the matter satisfactorily please contact Lloyd's on coronavirus@lloyds.com.

Lloyd's expects underwriters to ensure they do not automatically cancel policies for consumer and SME customers by reason solely of the application of a non-payment of premium clause for a period of non-payment for up to 60 days. Underwriters should discuss the operation of this clause with their coverholders to ensure it is not automatically applied regardless of the policyholder's circumstances. Cancellation may still be made for any other valid reason whether in line with a contractual or other legal basis. You can find out more in our delegated authority guidance section.

We have made a number of changes intended to reduce the current administrative burden on effecting renewals including:

· We expect the lead managing agent on a binding authority to be responsible for the binding authority renewal compliance due diligence in accordance with the ‘Code of Practice – Delegated Authority’.

· Currently, binding authority contracts need to name each individual who has authority in the coverholder to bind risks, issue insurance documents or settle claims. With immediate effect, only the individual(s) with overall responsibility for the binding authority (i.e. those who would be named in section 3.1 of the model binder wording) must be named. You can find out more in our delegated authority guidance section.

Service continuity of DA service providers, particularly TPAs, is being assisted through the LMA’s DA Claims and COVID-19 Claims Steering Group. To help enable TPAs to focus on their resources and the ability to service customers we are encouraging managing agents to utilise the LMA’s centralised delegated claims database which can assist with operational, service resilience and claims performance questions and data.

Premium refunds

Lloyd’s has not issued specific guidance on how individual managing agents and coverholders should deal with requests for premium refunds. Managing agents and coverholders should assess premium refunds based on individual circumstances to ensure the fairest customer outcomes as well as ensuring that they are adhering to the legal and regulatory requirements in the country where the policy is effected/carried out.

Different territories, for example the US, have issued specific guidance on this which can be found with all the latest legal and regulatory guidance on Crystal.

Managing agents should also ensure that any decisions made around premium refunds align to Lloyd’s Minimum Standards, in particular MS9 – Customer.

The Lloyd’s guidance on premium payments by policyholders can be found on the COVID-19 hub within the delegated authority drop down. In addition, managing agents must refer to local regulatory requirements that are applicable in the relevant territory.

Managing agents and coverholders are encouraged to seek professional tax advice when considering the options available to them for premium refunds. Lloyd’s has already issued some guidance which can be found under the heading IPT on refunds of premiums due to COVID-19. Managing agents can also contact the Lloyd’s Tax Department via the following methods: email taxdept@lloyds.com, speak to your usual tax department contact, or visit the contacts page.

Lloyd’s has not issued specific guidance on this and each claim where this scenario applies should be treated on a case by case basis. Where the syndicates have granted a premium holiday due to hardship, they should consider whether withholding the premium is appropriate in relation to the policyholder’s circumstances and the local legal and regulatory guidance.

Financial Conduct Authority

Lloyd’s has shared it’s response to the consultation with the LMA but has not formally published its response. Please see the FCA consultation drop down for further information.

Please visit the FCA website for information.

In particular, there are two recent areas that the FCA has focussed on; customers in financial difficulty and product value. You can find out more about how we’re engaging with the FCA in the FCA consultation drop down.

Other

Supporting our people

We have created new guidance and information for our line managers to help equip them with the tools they need to manage their teams remotely. This includes information leading virtual teams through uncertainty, enabling and supporting teams to work virtually and guidance and support for those working at home who are managing childcare and caring responsibilities.

The health and wellbeing of our employees is of upmost importance to us.

We are ensuring the communications with our employees from our CEO, John Neal, are regular, thoughtful and informative. This includes regular email updates and a weekly CEO vlog in which John keeps everyone in the loop and shares his thoughts on the prior week/week ahead.

We understand that not everyone is set up for effective homeworking and it’s important to us that our employees have access to suitable and appropriate furniture and technology. We have asked all employees to assess their own situation and purchase additional equipment – and we will cover the cost.

In addition, we have accelerated our plans to address wellbeing to ensure our employees have the support they need at the right time. We have partnered with Headspace to provide new tools to help employees start practicing mindfulness and meditation. We’re also sharing great resources with our employees from external providers, such as the NHS’ Every Mind Matters site which aims to support mental health during this period with lots of scenarios, tips and advice. We have introduced a wellbeing section on Lloyd’s University which has a range of tools and resources designed to help us adapt and cope in these challenging times.

The matter of whether cancellation from inception is appropriate is based on the specifics of a policy or policyholder and therefore Lloyd's cannot opine on whether a cancellation from inception is appropriate or not.

Lloyd's would remind managing agents of the following

1) A managing agent should not adopt a policy of automatic cancellation from inception for failed payments after 60 days and due consideration should be paid to the circumstances of each individual case to ensure that any such cancellation would be fair and reasonable. Due consideration should be given to the implications of cancellation from inception specific to first party and third party policies

2) Where a cancellation from inception is considered appropriate or a customer requests this then the managing agent should ensure that the policyholder understands what this means in clear understandable language. Any communication to policyholders should clearly articulate what is meant by the terminology used.

We have increased the period of emergency special leave available to Corporation employees from one week to two weeks. Leave can be booked in half or full days and does not need to be booked in blocks. This is designed to support colleagues who cannot undertake work around their home responsibilities – for example if their child is unwell and they are unable to work.