Consortia

Key definitions

Consortium (plural: Consortia): An agreement where one or more managing agents delegate authority to another Lloyd’s managing agent to enter (re)insurance contracts on their behalf. A Lloyd’s Consortium allows risks to be entered into by Lead Underwriters for and on behalf of themselves and Follow Underwriters with multiple brokers. When the Consortium Manager subscribes to a risk using the consortium stamp, follow underwriters who participate on the consortium will be automatically subscribed to the risk based on their pre-agreed share, as specified in the consortium agreement.

Consortium manager: The Lloyd’s managing agent being given delegated authority.

Why guidance is needed

To ensure consistent oversight of Lloyd’s consortia.

Lloyd’s requirements

Coverholders and service companies

A Lloyd’s ‘consortium’ is defined specifically to apply to a delegation of authority between managing agents and excludes arrangements involving a coverholder or non-Lloyd’s insurer.

Where a coverholder is granted its own CSN (also known as a “C&C number”), this is not a consortium and should not be referred to as one.

It must be noted at this time that service companies in Singapore, Canada, Dubai and Australia may use the term ‘consortia’ to describe the standard form delegation of authority arrangements between service companies. This has been permitted by Lloyd’s, however, they are not true consortia. Please refer to the service company webpage.

Registration with Lloyd’s

Consortia

Lloyd’s and LIC consortia do not require approval from the Delegated Authority team. Lloyd’s do not need consortium agreements to be registered on a system however; LIC consortia must be uploaded to Secure Share. Consortium Managers must upload agreements to Secure Share within three months of inception.

Binding authority agreements written by consortia

Where a consortium participates on a binding authority agreement or a coverholder appointment agreement, that agreement needs to be registered correctly on Lloyd’s systems. Managing agents whether lead or follow are responsible for ensuring that their capacity is registered correctly. For further information regarding how capacity should be set out please use this knowledge article: DCOM Support Centre Knowledge Base - How to create a registration in DCOM and navigate to the part regarding capacity.

Single Syndicate Consortium Arrangements

Where a managing agent wants to set up a consortium agreement, but it is written 100% by a single syndicate, it is not a consortium and is not permitted by Lloyd’s or LIC to be registered as a consortium because they lack delegation between managing agents.

Establishment & Duration

Consortia can be continuous as per the continuous contracts guidance.

 When a consortium participates on a binding authority or line slip, the allocation of risks written by the consortium will determine the year of account for all underlying contracts, in accordance with the inception‑date allocation guidelines. Regarding inception date allocation guidelines, please use the continuous contracts guidance if the consortium is a continuous contract.

Non-Lloyd’s Participation

Although the Definitions Byelaw defines a consortium as an agreement involving delegated authority between Lloyd’s managing agents, there is growing market interest in similar arrangements involving non-Lloyd’s participants acting as the Consortium Manager, with Lloyd’s managing agents following. If a non-Lloyd’s company leads, Lloyd’s does not recognise it as a Lloyd’s consortium.

Where there is any non-Lloyd’s participation in a consortium:

• The arrangement is not a “Lloyd’s” consortium and must not be branded as such or use “Lloyd’s”.
• Lloyd’s branding, including the Lloyd’s sleeve and logo, must be removed.
• If any Lloyd’s participation exists, the LMA model wording should be used, with amendments to include non-Lloyd’s participants. The LMA wordings can currently be located on the Lloyd’s Wording Repository.
• If a non-Lloyd’s entity is the Consortium Manager, a Lloyd’s syndicate must be nominated as the Lloyd’s lead and confirmed within the agreement.
• Claims processes need to be fair, transparent and allow for appropriate oversight of claims by the Lloyd’s follow market.

LIC does not permit any sub-delegation of authority to non-Lloyd’s entities. All delegation beneath a LIC consortium must remain within LIC approved entities.

Rating Transparency

Consortia must specify the basis for calculating premiums, discounts, commissions, brokerages, fees, and expenses. Any changes thereto must also be communicated to follow underwriters in advance for their agreement to the same. Preferential terms (e.g., Consortium Manager fees, differential premiums, or commissions) must be fully transparent to all managing agents involved in the consortium.

Scope of Authority

Consortia must clearly define the types of risks the Consortium Manager is authorised to bind.

Contract layering for Consortia

Lloyd’s and LIC allow consortia to participate on binding authorities, coverholder appointment agreements and line slips without prior agreement under the conditions referenced below in the managing agent oversight section.

Lloyd’s and LIC do not allow consortia to be used to participate on other consortia due to a lack of data transparency as only one consortium number can be used for processing. It could also provide several more layers of delegation underneath it and cause more complex distribution chains. Without data transparency, oversight of such distribution chains is difficult.

Lloyd’s has introduced region specific consortia agreements in certain territories. These agreements provide a framework for Service Companies in specific regions to participate in consortia, enabling multiple managing agents to pool capacity behind a single Service Company, while meeting local regulatory requirements. This structure extends consortium arrangements beyond the London market where appropriate.

For further details, please refer to the territory‑specific pages.

Lloyd’s expectations for managing agent oversight

Managing agents, whether lead or follow, should ensure robust processes and procedures are in place for oversight of consortia.

Lead & Follow Relationship

Consortium Managers, as administrators of consortia, should ensure follow underwriters have timely access to risk, premium, and claims information to prevent portfolio management issues.

While Lloyd’s expects Consortium Managers to provide adequate information to follow underwriters, it remains the responsibility of each managing agent involved in the consortium to ensure the consortium agreement clearly defines the Consortium Manager's reporting duties. It should specify sufficient information about the risks bound, allowing each managing agent to meet Underwriting Profitability Principles, Principle 1, and other Regulatory and internal reporting requirements.

Scope of authority

Consideration should be given to:

• Referral criteria to follow underwriters if the agreement is broadly scoped.
• Accepted limits and risk aggregation, including referrals to follow underwriters within a set timeframe.
• Potential aggregation clashes with other risks written by the syndicate.

Contract layering for Consortia

Managing agents are required to ensure the following in layered arrangements involving a consortium:

• LIC does not permit any sub-delegation of authority to non-Lloyd’s entities. All delegation beneath an LIC consortium must remain within LIC approved entities.
• Amend the wording to allow participation in binding authorities, coverholder appointment agreements or line slips as the LMA template wordings currently exclude this in multiple places.
• Ensure the consortium agreement clearly defines the information to be provided to the following market regarding the layered contracts.
• Address premium, risk and claims transparency, auditing, documentation and contract changes within all layered contracts.
• Define the frequency and timing of reporting provisions within all layered contracts.
• Evaluate whether creating an extended distribution chain could complicate claims oversight and fair value for policyholders as per the fair value guidance set out by the customer oversight team.

Other contractual considerations

Managing agents may want to include a notice period to the following market where the consortium capacity may change, be non-renewed, or the consortium agreement not be renewed entirely.

Managing agents may want to stipulate within the consortium agreement the financial crime processes, whether all the subscribing managing agents agree to follow the Consortium Manager’s approach or carry out their own individually.

Processing

All consortia must be registered with Velonetic.

Velonetic processes premiums and claims according to the pre-agreed share, streamlining placement and processing, especially for multiple risks.

Each consortium agreement receives a Central Settlement Number (“CSN”) from Velonetic (or potentially more than one when there are variable lines).  To reserve a CSN, contact Velonetic directly or refer to their guidance: Velonetic Consortium and Coverholder numbers.