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Policy coverage

Many of you are receiving and asking various questions regarding policy coverage relating to COVID-19 claims. In order to give a timely, consistent and accurate response to such questions, a small combined Corporation / LMA working group was established in mid-March. This group meets every day to discuss and agree the various questions being raised, and to assist managing agents in answering these queries.

There have been many varied and very specific questions that have been raised and answered, whilst some of the more ‘general’ ones are noted below:

Pandemic / contagious disease extensions: where such unspecified extensions are provided, on business interruption or contingency covers, Lloyd’s would expect this to include losses related to COVID-19.

Retrospective covers: Lloyd’s does not expect covers to be extended retrospectively to cover COVID-19 related losses.

Policy renewals and extensions: we are aware of a number of requests to extend policies given difficulties often being experienced in the short-term. Whilst it is Lloyd’s view that it is preferable that policies should be renewed rather than extended, even if for short periods pending fuller review, it is also our view that extensions should be granted whenever appropriate. We ask that you use your own judgement at portfolio and/or individual policy level, with our commitment to support your decision.

Binding authority contracts, renewals and extensions: a more detailed note will be issued to the market regarding binding authorities. 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).

Non-payment of premiums: Lloyd’s expects Underwriters to ensure that 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. In respect of policies for other customers, Lloyd’s expects underwriters to have regard to the suitability and fairness of applying such a provision.

Overwriting of GWP: where any of the above leads to ‘overwriting’ of agreed GWP levels (most likely for the 2019 year of account) then this will not be cited by Lloyd’s as a reason to prevent you taking this action.