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Setting up a service company

Delegated Authrorities

View all 'Delegated Authrorities'

What parameters need to be in place for a service company?

The primary condition for a service company to be set up is that it must be a wholly owned subsidiary of the managing agent or managing agent’s holding company (or other arrangement as approved by Lloyd’s). 

Further to this, the expectation on managing agents is that in meeting the Lloyd’s Principles, appropriate controls and integrated capabilities are applied to the service company. These should include: 

  • Access to all underwriting, claims and complaints data; 
  • Aligned with the managing agent’s governance structures and policies, allowing for variances due to local regulation; 
  • Service company staff should be seen as part of managing agent’s group; 
  • Sub-delegated business controls are the same as if it was written directly by the syndicate.

The actual level of authority granted will be determined by the managing agent and set out in the service company agreement, in the same way it is set out in the binding authority agreement for a third-party coverholder. On this basis there are several categorisations for delegation that might apply to a service company and its delegation arrangements:

Delegation structures for local entities

Service company

Standard service company arrangement with group owned local entity being used by manging agent, with authorities set by managing agent and falling under delegated section of PBO framework.

Capacity Provider(s): 
Managing Agent

Local Underwriting Entity:
Local Company owned by MA Group

Oversight Categorisation:
Principle Based Oversight

Coverholder for Third-Parties1

Group owned local entity is provided capacity by its managing agent and other managing agents, it would be deemed a coverholder and would fall under coverholder oversight.

Capacity Provider(s): 
Multiple Managing Agents

Local Underwriting Entity:

Local Company owned by MA Group

Oversight Categorisation:

Coverholder


Other delegation through service companies

Consortia type arrangement

Lead managing agent delegates its consortia stamp to service company to use locally, use of third-party managing agents’ capacity means arrangement falls under delegated section of PBO framework.

Capacity Provider(s): 
Multiple Managing Agents

Local Underwriting Entity:
Local Company owned by Lead MA Group

Oversight Categorisation:
Coverholder

Local consortia2

Multiple service companies in a region form a consortia, all the service companies fall under their respective managing agent’s controls and therefore PBO oversight for delegated business applied.

Capacity Provider(s): 
Multiple Managing Agents

Local Underwriting Entity:
Local Company owned by MA Group

Oversight Categorisation:
Principle Based Oversight

Sub-delegation

A service company can form binding authority agreements with coverholder provided they have followed Lloyd’s coverholder registration process.

Capacity Provider(s): 
Service Company

Local Underwriting Entity:

Third-Party Coverholder

Oversight Categorisation:
Coverholder

Note:

  1. All parties fall under Lloyd’s PBO framework, in this arrangement the third-party managing agents should have coverholder oversight in place and demonstrate proficient governance and controls
  2. This arrangement is currently only used in Singapore

In all cases, local rules and regulations will determine what is permissible. For territory specific information please contact the local Lloyd’s office and refer to Crystal+.

Launch Crystal+

Registration process

1.

Initiation

Coordinate with Lloyd's account team and service company setup team to understand country interest, define service company and set timelines. 

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2.

Register & set up

Managing agents will submit business plans and work with country managers for regional setup according to local regulations. In tandem the service company is registered on Atlas to complete necessary business and company details. 

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3.

Service Company Underwriting Agreement

Once all registration and set up requirement are met then formal service company underwriting agreement can be signed and service company can start trading on agreed date.

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Service company registration and set up will have a dedicated point of contact within the Lloyd’s DA team, who will plan, track and coordinate the set up.

Registration process is straightforward with applications in Atlas being processed and approved within 24 hours if there are no referrals. Local set up timelines will vary depending on regulatory requirements and operational requirements.

Point of contact

Use the below mailbox as the central point of contact at Lloyd’s during the registration process.

coverholders@lloyds.com