New service company applications
About service companies
What is a service company?
A service company is a local entity within a managing agent’s (MA) group that has a signed service company agreement in place and is authorised to enter contracts on behalf of a syndicate. To download the definitions byelaw please view our useful documents section at the end of the page.
Why set up a service company?
Local market presence
Regional expertise paired with managing agent capabilities allow for an enhanced proposition with direct access to local distribution partners through local service companies.
Capital and cost efficient
Managing agent centralised capabilities and capital create an efficient model for international distribution and operations.
Straightforward onboarding
Lloyd’s provides a central point of contact to assist managing agents in all elements of their service company set up including local connection, Lloyd’s onboarding and regulators support.
What can a service company do?
A service company operational onboarding is comparable to a third-party coverholder but with some additional permissions. These permissions give managing agents unique benefits for entering regional markets through the Lloyd’s service company model.
For an entity to be considered a service company, it must demonstrate a close and integrated relationship with its managing agent. This differentiation allows for enhanced permissions to be granted to a service company unlike a third party coverholder:
Service companies may be authorised to sub-delegate their authority to other approved third-party coverholders via binding authorities without the need for prior approval from Lloyd’s, please see:
Please note that the sub-delegation model for Lloyd’s Europe differ and are covered in the Lloyd’s Europe section
A contract between managing agents in the form of consortium, can be delegated to a service company. In this arrangement the third-party managing agents will need to have coverholder oversight in place of this delegation.
Local consortia in the region can be formed between other service companies. This is a less common arrangement and currently only occurs in Singapore, however, would be permissible if local regulations allow and if there were demand. For further information, please contact Coverholders@Lloyds.com.
The LMA have produced a template wording for the Singapore arrangement and more information can be found here.
If a service company wants to write for third-party managing agents outside the group, this is allowed but must be approved as a third-party coverholder and follow those rules; the managing agent should contact coverholders@lloyds.com to change the entity from a service company to a coverholder.
The benefits of a service company through Lloyd’s
Security
Lloyd’s managing agents benefit from a derivative rating of A+ / AA- by virtue of the strength of the Lloyd’s chain of security and the central fund
A+
Superior
AM Best
AA-
Very Strong
Fitch Ratings
AA-
Very Strong
Kroll Bond Rating Agency
AA-
Very Strong
S&P Global
Territory support
- Country managers - All territories are supported by a dedicated country manager or agent for service Company guidance and set up. Whilst managing agents have the flexibility to establish service companies in the majority of the 80 licensed territories, Lloyd’s regional hubs are creating focal points around the globe for clients to access world leading (re)insurance.
- Licensing - Lloyd’s maintains the licences and handles overarching regulatory engagement, reporting on behalf of the market. Lloyd’s international trading advice team provides comprehensive support directly to all market participants.
- Central support including Lloyd’s registration, Lloyd’s tax support, local regulatory contacts and operational set up guidance.
Incorporated oversight
- Service company authorities are set by the managing agent and fall under the managing agent’s principle-based oversight and syndicate business plans. Giving the managing agents the responsibility and control over its governance frameworks.
- Straightforward registration process - Registration is accepted provided the service company register’s its core company information with Lloyd’s and writes classes of business already approved within a syndicates business plan and by the local regulator.
- Continuous contracts- Lloyd’s enables service company contracts to be evergreen, reducing administrative burden on managing agents.
Setting up a service company
Find out more about what parameters need to be in place for a service company and the registration process.
Ongoing operational requirements
Managing agents are required to demonstrate it is fully aligned with its service company. To do this several requirements are put on the managing agent:
Where a managing agent wishes to apply for approval for a new service company they should register their interest with their account manager, who will connect them with the service company set-up team to begin the registration process on ATLAS. The managing agent can then register the lines of business, underwriting and claims authorities it wishes the service company to have. The set-up team will also connect them with the country managers for local guidance on regulation and operational set up.
Once the service company is active, the managing agents can use ATLAS to update any changes to the service company on an ongoing basis. The managing agent is responsible for ensuring that its service companies only act in accordance with their ATLAS permissions and Lloyd’s licences and staff are suitably qualified.
A valid contract must be in place between the managing agent and service company. A template for such an agreement is available from the LMA (LMA3134). The contract must clearly establish the parameters of the authority being granted to the service company.
Service company agreements may be entered into as a continuous contract, for more information please refer to Lloyds.com.
For Lloyd’s Europe appointed service company related contracts see the “Lloyd’s Europe Service Companies” section below.The Lloyd’s principles apply to all managing agents, and its ability to meet the principles takes into account business written by each of its service companies. When a managing agent attests to its delivery against the Principles, this is assumed to also cover each of its service companies. The processes, controls and infrastructure in place within service companies should support the managing agent’s delivery against the Principles, allowing for operational differences due to local regulations.
With principle based oversight being applied, the onus is on the managing agent to demonstrate sufficient oversight of its service companies. These could include and are not limited to: formal Service Company policies, internal audits at periodic intervals, joint operational and commercial team reviews.
Where the service company is utilising third party capital, either as a coverholder or on a consortia type arrangement, the basis of oversight will be as though they are coverholder. For further guidance please contact the delegated team at coverholders@lloyds.com.
All service company agreements must be registered on DCOM. Access to DCOM is available to all managing agents through their Devolved Administrator. For knowledge articles on how to register service company agreements on DCOM, please refer to the market support centre.
Binding Authorities where a Service Company is sub-delegating to a third-party coverholder must also be registered on DCOM. Find knowledge articles on how to register a binding authority between a service company and a third-party coverholder(s) on DCOM on our market support site.
For requirements that apply to third party coverholder Arrangements, view our coverholders page.
All Lloyd’s Europe service company related contracts are also required to be registered on DCOM. This includes both;
- Regular Coverholder Appointment Agreements (CAAs) for delegation of underwriting to a Lloyd’s Europe appointed service company, and;
- Any LBS0067A versions of the CAA utilised by service companies for their appointment of third-party coverholders on behalf of Lloyd’s Europe.
Managing agent must have access to all underwriting, claims and complaints data.
For processing purposes this data must also be submitted through appropriate channels. service company data can be submitted in two ways
- Bordereaux processed through DXC in the same way as third-party coverholders; or
- Lloyd’s direct reporting (“LDR”)
Service companies writing 100% on behalf of their own syndicate are eligible to report regulatory and tax information directly to Lloyd’s through Lloyd’s Direct Reporting (“LDR”). Data is at a transactional level and it should be noted that this does not cater for the processing of premium but solely for reporting purposes.
Conventional subscription business (where it fits into one of the scenarios where a service company may write on behalf of a third party carrier) cannot be reported through LDR. Further information on LDR can be found on Lloyds.com.
Some territories also have additional reporting requirements which must be satisfied to ensure Lloyd’s can file relevant local returns. Further information is available on Crystal+.
Lloyd’s may have specific Territorial requirements. For Territory specific information please refer to Crystal+ and/or speak with the local Lloyd’s office, details of our global offices can be found below.
Lloyd’s Europe service companies
For Lloyd’s Europe, a service company wanting to provide capacity (delegate) to a third party Coverholder is required to become party to its Managing Agent’s Outsourcing Agreement or sign up to Lloyd’s Europe’s Service Company Outsourcing Agreement. This enables the service company to become a service provider for Lloyd’s Europe, in turn allowing the service company to:
- Underwrite and bind insurance on behalf of Lloyd’s Europe (with its managing agent as a service provider). This is set up via the standard Coverholder Appointment Agreement (CAA); and
- Appoint Lloyd’s Europe approved third-party Coverholders to underwrite and bind on behalf of Lloyd’s Europe. Appointments of Lloyd’s Europe Coverholders by outsourced service companies are arranged using a specific service company version of the CAA (LBS0067A) which caters for service companies acting as the service provider rather than its Managing Agent.
For the avoidance of doubt the general requirements and guidance set out on this webpage apply equally to Lloyd’s Europe business unless:
- There is an incompatibility with local regulatory rules; or
- Lloyd’s has issued territory specific guidance on a particular point. For territory specific information please contact Lloyd’s Europe and refer to Crystal+.
Contact us
If you would like to discuss anything related to Service Companies please contact the Delegated Authorities team.
Useful documents
Delegated Authority resources
Explore the resources available to support Delegated Authorities.
