Lloyds: Law and Practice

capital requirements: capital resources requirement 250–1; European Union , ; Individual Capital Adequacy Standards (ICAS) 251–2; Lloyd’s market ; Solvency II ; UK insurers

Capital Structure Working Party , 106

Central Accounting 6, 139, 184, 220, 229, ; premiums trust fund 260

Central Fund , ; New Central Fund 11,

Central Settlement see Central Accounting

Centrewrite Limited 40, 46, 52, 54; deceased members 87; cessation of membership 86; reinsurance to close by 103

China

claims: 1992 and prior business 219; Claims Management Principles and Minimum Standards 227;delegation of claims handling ; electronic reporting 229; electronic settlement 229; ICOBS 228; leading underwriter clauses 226; Lloyd’s agents 226; see also Claims Schemes

Claims Schemes 6, 211; 1991 Claims Scheme 219; 1994 Claims Scheme 220; 2006 Claims Scheme ; 2010 Claims Scheme

codes of practice: Code of Practice-Delegated Underwriting ; Code for Underwriting Agents: Syndicate Expenses 135, 139; Contract Certainty Code of Practice 184, 195n74; Members’ Agents Code of Practice 166; Service Companies Code of Practice 203

Committee of Lloyd’s 6, 20, , 26; financial guarantee 243; powers and duties 28, 30, 42, 68; supervision of underwriters 233; Underwriting Agents’ Manual 125

conversion arrangements 88

Conversion Rules 88

corporate members , 37, 39, 125, 262; 1993 Business Plan , 125; accounts and reporting 284; anti-concentration rules 99; capacity offers ; capacity transfers ; capital structure ; conversion arrangements 88; corporate capital 48; Council of Lloyd’s 65; direct corporate participants 127; Enforcement Committees 311, 315; Funds at Lloyd’s ; general meetings 71; individual accounts 289; Limited Liability Partnerships 303; members agents 163; membership , ; membership agreements ; Members’ Compensation Schemes 325n24; New Central Fund , 347; obligations ; premiums trust deeds , 267, 268; profits taxes ; Reconstruction & Renewal 53; reinsurance to close 103; reorganisation orders 348; resignation 85; Scottish Limited Partnerships 303; standard managing agents’ agreements , 491–528; substitute agents ; syndicate membership ; syndicate profits 294; syndicate tax computations ; taxable profits ; taxation of members 302; underwriting 82–3; United States 265

Corporation (of Lloyd’s) 1, 26, 63, 70; corporate capacity ; FSMA 8, 94; Lloyd’s Act 1871 20

Council of Lloyd’s 1, , , 74; 2010 Claims Scheme 225; aggregate accounts 284, 288; Lloyd’s Act 1982 6, 171; premiums trust deeds ; substitute agents 356; transfer of business 306; covenant and charge 84; funds at Lloyd’s 10, 11n66,

coverholders 4, ; approved coverholders 4, 199, ; approval of ; binding authorities 99n12, 138, 146, 169n1, , 205; fiduciary duties ; placing brokers 172–3; restricted coverholders 4, 158, 199, 202, 205; restrictions on business 158; see also approved coverholders; binding authorities; restricted coverholders

Cromer Report ; rejecting members’ limited liability 98; underwriting standards 98, 233

declaration of compliance 83, 273

de-emption , 147; members’ agents’ agreements 129; standard managing agent’s agreement 134

delegated underwriting ; accounting ; approval of coverholders ; approved coverholders ; binding authorities , ; cancellation of authority 209; claims handling ; code of practice ; consortia ; duty of care ; fiduciary duties of coverholders ; FSMA 218; lineslips , ; Lloyd’s requirements ; minimum standards ; payments ; registration of binding authorities 205; registration of restricted coverholders 205; restricted coverholders ; Solvency II 218; syndicate service companies ; termination of authority 209

direct corporate participants (DCP) 77, 82, 109; agency agreement terminations 117; obligations 143; see also corporate members

disciplinary committees see Enforcement Committee

dispute resolution: arbitration scheme ; member-underwriting agent disputes ; members’ compensation scheme ; member-Lloyds 327; members’ ombudsman scheme 327; policyholder disputes ; syndicate ICA 328; underwriting agent-Lloyd’s 328

electronic placing

enforcement ; appeal from Council decisions 320; Appeal Tribunal ; Enforcement Board 312; Enforcement Byelaw ; Enforcement Tribunal 313; grounds for action ; inquiries ; intervention orders ; Lloyd’s Council ; proceedings ; sanctions ; skilled person reports 310; see also Enforcement Committee

7, ; enforcement proceedings 314; imposing sanctions , 319; members’ ombudsman scheme 327; rights of appeal 316

Equitas 6, 12, 141, 275, 305, ; Australia 337; claims processes 219; deceased members 87; New Central Fund ; premiums trust deeds 256; reinsurance ; reinsurance to close (RITC) , 160; run-off 245; United States 266, 306

external member of the Society

external member of the Council 65

external regulation

Financial Conduct Authority (FCA) 89, 91, 95; aggregate accounts 288; byelaws 67; cooperation arrangements 7, 308; delegated underwriting 218; Enforcement Byelaw 308; FCA Principles for Business 165; insurance mediation activities 171; managing agents 154, 165; premiums trust deeds 259; see also Prudential Regulation Authority (PRA)

financial guarantee business ,

Financial Services and Markets Act 2000 (FSMA): authorised persons 91; regulated activities 92; regulation of Lloyd’s market ; supervision of Lloyd’s market ; see also basic market activity; managing agents; members’ agents; regulated activities; secondary market activity

Fisher Report , 50, 170, 233, 275

following year underwriting

Franchise Board 2, 6, , 66, 68, ; 2006 Claims Scheme 221; agency agreement terminations 117; approved coverholders ; binding authorities , 210; business planning ; claims handling 211, 225; delegated underwriting 200; directions to underwriting agents 159; managing agents 136, , , 164; managing syndicates 102; Market Supervision and Review Committee 310; members’ agents’ agreements 131; Minimum Standards for Delegated Standards 216; new syndicates 106; performance management 235; placing brokers 173; register of binding authorities 205; resolving disputes 328; restrictions on business ; reviews 159; run-off ; substitute agents 160, 264; syndicate premium incomes 241; underwriting guidelines 237

Franchise guidelines 59, 234, 240

Franchise Principles 58, 234

Funds at Lloyd’s (FAL) 10, 83, ; personal reserve sub-fund 273; special reserve fund 274; trust deeds

funds in syndicate 257n10, 262, 270; corporation tax 296

General Meetings of members of the Society 53, 65n7, 67, 71

General Undertaking 28, 69, , 81, 354

General Underwriters Agreement (GUA) 193,

globals 283

incidental syndicates 97, 148

Individual Capital Adequacy Standards (ICAS) 248, 251–2; New Central Fund 277; Solvency II 253

individual members see Names

insolvency procedures

insurance business transfers 54, 85,

insurance market direction 9n58, 93,

integrated Lloyd’s vehicle (ILV) 50, 57, 99

interavailable funds at Lloyd’s/deposit 49; funds at Lloyd’s 271

intervention order 307,

Japan

joint certificates

leaders/leading underwriters: appointment 192; authority 194; disclosure by the broker ; duties of care ; general underwriters agreement ; leading underwriter agreement 192; placing processes ; representations by the broker ; slips 193

life business 173, 244, 305, 332; Australia 336; premiums trust funds ; Singapore 337; United States 332; see also long term business

limited liability partnership (LLP) 75, 78, 303; agents’ disputes 323; enforcement 310; members’ agents 2; profits taxes 291; sanctions 315; underwriting members 1

lineslips 109, 158, , 195, , , 286; see also binding authorities

Lioncover Insurance Company Limited 34, 52, 54, 103

Lloyd’s: byelaws ; constitutional requirements 71; corporate capacity ; Council of Lloyd’s ; definition 1, 63; governance ; Lloyd’s Acts 63; regulatory powers ; see also Lloyd’s agents; Lloyd’s brokers; Lloyd’s deposits; Lloyd’s market; Lloyd’s policies; Names; members; Society of Lloyd’s

Lloyd’s agents 17, 64, 345; claims 221, 226, 346; insurance certificates 200, ; salvage arbitrations 345

Lloyd’s American Instruments (LAI) 212, 260, 265

Lloyd’s American Trust Deeds (LATD) 265

Lloyd’s American Trust Funds (LATF)

Lloyd’s Asian Instruments 268

Lloyd’s brokers , ; 2006 Claims Scheme 221; 2010 Claims Scheme ; accounting ; approved coverholders 202, ; binding authorities 205, 206, 212, ; broker markets 4; claims abroad 346; claims processes ; disclosure and representation ; dual capacity ; electronic claims reporting 229; electronic placing ; enforcement , 311n36, 318; errors and omissions insurance 182; insurance certificates 345; litigation 351; misconduct 315, ; open market correspondents ; payments to brokers 180–2; placing brokers 172–3; registration of brokers ; responsibilities 177, ; Singapore ; statutory monopoly 169, 172; terms of business agreements ; United States 265; The Zephyr

212, 265

Lloyd’s Canadian Trust Fund (LCTF)

Lloyd’s deposits 64, 84, 233, 263; conversion arrangements 88; funds at Lloyd’s trust deeds ; members’ agents 129; overall premium limits 82; taxable profits 299

Lloyd’s Dollar Trust Fund (LDTF) 267

Lloyd’s market: annual audits ; business plan ; capital structure ; constitution ; corporate capital 48; Cromer Report ; financial assistance for Names ; financial guarantee business ; Fisher Report ; Franchise Model 57–61; guarantees and deposits 19; incorporation ; Lloyd’s Act 1911 21; Lloyd’s Act 1982 ; Lloyd’s Acts 63; LMX ; Neill Report ; non-marine business ; origins ; post-R&R strategy ; premiums trust funds ; Reconstruction & Renewal ; task force ; trust deeds ; Walker Report ; World War I 24; World War II ; see also Lloyd’s; Names

Lloyd’s Market Association (LMA) 60, 176, 185n12; managing agents

Lloyd’s market reorganisation order: insolvency procedures 348

Lloyd’s policies: deceased members 87; Financial Services Compensation Scheme 278; Lloyd’s Policy Signing Office 5, , 184, 191

LMP slip 185, 193

London market excess of loss business (LMX) 37, 352; Business Plan ; Franchise Guidelines 241; members’ agents’ agreements 129; Walker Report , 233

long tail business 352; run-off contracts , 353

long term business 243, 244, 244n78, 250, 253; funds at Lloyd’s ; overall premium limits 82; premiums trust deeds 259; premiums trust funds ; solvency test 281; Special Trust Directions 265; United States 266

managing agents 123, ; application of FSMA ; conditions 159; decision processes ; directions 159; duties , ; financial resources ; ICOBS 228; Lloyd’s Market Association ; permission of the Franchise Board 151; powers and duties ; remuneration 141; requirements on 155, 159; restrictions on business ; reviews 159; substitute agents 160; withdrawal of permission 152

managing agents’ agreements: admission to membership 77; conversion arrangements 88; premiums trust funds 10; standard managing agents’ agreement , 455–527; syndicates 2, 3, 10

managing agent’s trustees 10, 101, 131, 152; funds at Lloyd’s trust deeds ; Lloyd’s Dollar Trust Funds 267; premiums trust deeds 260, 261n43, 262, 264

mandatory offers

market reform contract (MRC) 5, , 193

members ; admission ; categories and classes ; conversion arrangements 88; deceased members ; financial requirements 9; fees ; funds ; members’ agents ; members’ agent’s agreement , 416–41; members’ compensation scheme ; membership agreement , 397–411; membership requirements 82–3; resignation of membership ; reviews of members’ affairs 84; subscriptions ; termination of membership ; underwriting requirements 82–3

members’ agent pooling arrangement (MAPA) 39, 106, 110, 127, 302

members’ agents ; application of FSMA 165; codes of practice ; financial requirements 165; permission by Lloyd’s ; underwriting agents ; see also members’ agents’ agreements

members’ agent’s agreement , 416–41

members’ compensation scheme

Membership Agreement , 397–411

Minimum Standards ; claims handling 225, 227; Franchise Board 156; managing agents’ duties 135, 152; performance framework ; see also codes of practice

minority buy-outs 60, ; syndicate mergers 118

mirror syndicates see incidental syndicates

multiple syndicates , 120, 201; shared reinsurance 242

multi-year contracts 105

Names: cash calls 37, 351, ; conversion arrangements 88; deceased members 87; dispute resolution 322; Fisher report 29n79, ; indirect Names 215, 353; litigation , , 351; London Market excess of loss 352; managing agents’ duties , ; members of Lloyd’s 1; Members’ Agent Pooling Arrangements 106; members’ agents , 354; members’ agents’ agreements ; members’ compensation scheme 325; mutualisation of liability 38; Neill Report , 37; premiums trust deeds 256, 355; Reconstruction & Renewal ; reinsurance 45, ; relationship with underwriting agency companies ; rights 38, 39; standard agency agreements , ; task force ; Walker Report ; see also individual member, member

Namecos 75

Neill Report ; brokers 170; disputes 322; members’ compensation scheme 325; new syndicates 109; standard agency agreements 125, 136

New Central Fund , 249, 275, ; corporate membership 81; drawdowns 140, 142; fees and subscriptions ; insolvency procedures 347; members’ compensation scheme 326

nominated members of the Council 34, 36, 42,

non-Lloyd’s brokers 136,

non-underwriting members 19,

169, , 183; accounting 231; Brazil 342; China 342; claims 231; competition law ; contract certainty ; disclosures by brokers, ; electronic placing ; followers ; general underwriters’ agreements ; leaders (duty of care) ; leaders ; market practice ; market reform contracts ; premiums 231; relationship between policy and slip ; representations by broker ; Singapore ; The Zephyr

open market correspondents

overall allocated capacity 82

overall premium limit (OPL) , 85; funds at Lloyds requirements ; members’ agents’ agreements 128–9; special reserve funds 274

overseas business 11; Australia ; authorisation in the EEA ; authorisation outside the EEA 330; Brazil ; Canada ; China ; Credit for reinsurance (US) 333; Japan ; Lloyd’s scheme regulations ; Singapore 337-9; surplus lines business (US) ; trust funds for US licensed business 334; United States

Overseas Business Regulatory Deposits 9, 11, 101, 255, 259, 261, 263, 268

overwriting 241

parallel syndicates 104, 110, 138, 146; minority buy-outs 120

payment of premiums and claims

personal reserve sub-fund (PRF) 130, 256, 261, 273; Canada 268; release to on RITC 145

policies see Lloyd’s policies

portfolio selection 129, 130, 163, ,

pre-emption

premiums trust deeds (PTD) 7, 47, 256; commentary ; delegated underwriting 212; members’ agents 164

premiums trust funds (PTF) 9, ; assets ; litigation ; managing agents 134, , ; members’ agents 164; permitted trust outgoings 258; structure

Principles of Relationship 155, 235

PRA-regulated activities

Prudential Regulation Authority (PRA) 2, 89; see also PRA-regulated activities

quasi-corporate members 1
quasi-individual members: arbitration schemes 323; members’ compensation scheme 325; ombudsman scheme 327

recognised accountant 139; appointment 102, 158; audits 287

Reconstruction & Renewal (R&R) ; litigation ; New Central Fund 275; standard agency agreements 125

regulated activities , 248; authorisation under FSMA ; EU Insurance Directives ; external regulation , 90; management of syndicates 102, ; managing agents 154; members’ agents 163, 165; supervision ; underwriting agents 163

Regulating Trustees 10, 145, 257, , 268, 273

reinsurance to close (RITC) 40, 52, 54 ; agency liability 353; deceased members 87; insurance business transfers ; run-off ; standard agency agreements ; standard managing agents’ agreements 134, 138; supervision of underwriting 242; syndicates , 118; trust outgoings 259

related party transactions: disclosure 137, 236, 242; managing agents’ duties 137; syndicate accounts

reorganisation controller: insolvency proceedings

restricted binding authorities 158, 172, 200, 210; insurance contracts 210; see also binding authorities; restricted coverholders

restricted coverholders 4, 199, , 205, 207

risk management principles 239

run-off companies 92n26, , 211, 246, 315; enforcement ; restrictions on business 159

run-off managers 102, 152, 157, 159, 285

Scottish limited partnerships (SLP) 1, 75, 78, 303; members’ agents 2n12; members’ compensation scheme 324n24; profits taxes 291

secondary market activity: FSMA , 94; PRA-regulated activities 93

service companies 136, 172–3, 207, 208; approved coverholders 202; Canada 335; electronic claims reporting 229; Japan 340; restrictions on business 158; Singapore

several liability 2, 3, 75, , ; Australia 336; Canada 335

several liability clause , 243

Singapore 337

slips 3n21, , 100, 183, 318; 2010 claims scheme ; binding authorities 207; brokers’ duties 178; electronic claims reporting 229; leaders , ; MRC Guidelines ; open market business ; policy and

Society (of Lloyd’s) 2, 63; byelaws 66; capacity offers ; capacity transfer 113; Central Fund 276, 277; Council of Lloyd’s ; delegated underwriting by 200; dispute resolution , 326, 327; enforcement committees 311; Financial Services and Markets Act 2000 93, 94, 322; fundamental rules of the Society 28, 29, 98; general meetings 71; incorporation ; intervention orders 319; litigation 351; Lloyd’s Act 1911 64; members ; members’ compensation scheme 326; ombudsman scheme 327; sanctions for misconduct 315; Solvency II ; solvency test 281; substitute agents 160; working members 30, 73; see also Lloyd’s

SOLPRU 91, 218, , 247,

solvency test

90–1, 218; capital requirements , ; delegated underwriting 218; regulation of members ; see also SOLPRU

special purpose syndicate (SPS) 61, 108, 241

special reserve fund (SRF) 11, 84, 129, 249, 274, 295; syndicate tax computations 295; taxable profits 300,

Special Trust Directions 137, , 265, 268; Lloyd’s American Instruments 265; Lloyd’s American Trust Deed 265; Lloyd’s Asia (Offshore Policies) Instrument 2002 265; Lloyd’s Asia (Singapore Policies) Instrument 2002 265; Lloyd’s Canadian Trust Deed 265; members’ obligations 142; premium trust deeds , 263; premiums trust funds , 257, 260; reinsurance to close 145

Special Trust Funds: Lloyd’s American Trust Funds ; Lloyd’s Asia (Offshore Policies) Instrument 2002 265, 268; Lloyd’s Asia (Singapore Policies) Instrument 2002 265, 268; Lloyd’s Asia Scheme Regulations ; Lloyd’s Canadian Trust Fund ; Lloyd’s Dollar Trust Funds 267; see also Special Trust Directions

standard agency agreements , 446–455; standard members’ agents’ agreements ; standard agents’ agreement ; standard managing agent’s agreement ;

standard managing agent’s agreement 455–527; allocation of risks 138; arbitration 150; capacity transfers 147; cash calls 140, , 150; claims 138; commencement ; duty of care ; fiduciary duties ; following year underwriting ; generally ; governing law 150; jurisdiction 150; managing agents’ powers ; members’ obligations ; New Central Fund drawdowns 140; nomination of successors 147; notices 150; reinsurance to close 138, 145; remuneration of managing agents ; settlement 138; substitute agents ; successors 147; syndicate expenses ; syndicate members ; taking over provisions ; termination ; variation of agreement

subscription business , , claims

substitute agents: managing agents , 160; members’ agent , standard managing agent’s agreement

surplus lines business (USA) ; Lloyd’s American Trust Funds 266

surrender arrangements 83n77; capacity offers 115; capacity transfers 113; mandatory offers 116

swap arrangements see surrender arrangements

syndicate allocated capacity 11, 38, , , 157; mandatory offers ; minority buy-outs ; pre-emption and de-emption 111; syndicate meetings 122

Syndicate and Arbitration Agreement 100, 133

syndicate annual accounts 39, ; aggregate accounts 288; audit 287; disclosure 137; managing agents’ duties 137; publication and distribution 287

syndicate auditors 54, 134; appointment 287; claims against 351, 356; liability 353; removal 287; taking over provisions 148

syndicate cessation

syndicate ICA 95, 102, 235, 238, 249; disputes 328; individual capital adequacy standards 249, 251–2

syndicate list 77, 126, 148; agency appointment 146; members’ agents’ agreements 128–9, 131, ; remuneration of the managing agent 141

syndicate meetings 122

syndicate mergers

syndicates 1, , ; agency agreement commencements ; agency agreement terminations , ; arbitration 150; auctions ; authority ; bilateral arrangements 114; capacity offers ; capacity transfer , 147; changes in participation ; de-emption 112; following year underwriting ; governing law 150; insurers’ liability 100; jurisdiction 150; legal proceedings 101; major syndicate transactions 118; management ; managing agents’ powers ; mandatory offers ; meetings 122; members’ agents’ agreements ; members’ obligations ; membership of syndicates ; minority buy-outs ; multi-year contracts 105; Names obligations ; new syndicates ; non-marine business 21; notices 150; obligations ; participation nominations 147; pre-emption 111; principles of participation ; reinsurance to close , 145; reinsurers’ liability ; relationship between members , 123, ; remuneration of management agent ; several liability ; standard agency agreements ; standard agents’ agreements ; standard managing agents’ agreements ; substitute agents ; surrender arrangements 115; syndicate cessations 121; syndicate mergers ; taking over provisions ; variation of agreements

taking over provisions 123, , 150

Task Force

taxation of members: companies 296; individuals 299; insurance premium tax 304; Limited Liability Partnerships 303; profits taxes ; Scottish Limited Partnerships 303; syndicate profits ; syndicate tax computations 295; value added tax

Terms of Business Agreement (TOBA) (Lloyd’s broker-client) 178

Terms of Business Agreement (TOBA) (managing agent-broker) 4, 172,

transfer agreements 88

transition arrangements 88; capacity transfer 113

turnkey syndicates 107, 138

170, 170n12

underwriting: financial guarantees ; Franchise Guidelines ; life syndicates 244; overwriting 241; performance framework of minimum standards ; performance management , 240; reinsurance to close 242; related party transactions 242; risk management ; run-off ; shared reinsurance 242; supervision ; syndicate business planning ; syndicate monitoring ; war risks 243; see also underwriting agents

underwriting agents: permission by Lloyd’s ; see also active underwriters; delegated underwriting

underwriting guidelines 235; Code of Practice ; Franchise Board 237; minimum standards 216

underwriting management principles 216,

underwriting members , , 111, 306, 340; capacity transfer 112; delegated underwriting 200; litigation 351; members’ agents’ agreements 128; members’ compensation scheme 326; pre-emption 111; reinsurance to close 103; taking over provisions 149; see also active underwriters; delegated underwriting

Underwriting Requirements: admission to membership ; appeals tribunals 317, 320; approval of coverholders 203; conduct of inquiries 310; costs 314; delegated underwriting ; dispute resolution 328; enforcement ; inquiries 310; intervention orders 319; managing agents , 155, 157, 159; minimum standards ; misconduct 314; run-off 246; sanctions 314; see also underwriting; underwriting members

underwriting year accounts ; publication and distribution 287

United States ; binding authorities ; corporate membership 265; Equitas 266, 306; life business 332; Lloyd’s American Instruments (LAI) 212, 260, 265; Lloyd’s American Trust Deeds (LATD) 265; Lloyd’s American Trust Funds (LATF) ; Lloyd’s brokers 265; long-term business 266; overseas business

Value Group 48, 49; 1994 Value Group report 106, 150

war risks 24, 26, 208,

working member of the Council 74

working member of the Society 73, 74, 311

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