Requirements relating to contracts of delegated authority
1. The Council may from time to time prescribe conditions and requirements with which all contracts of delegated authority or any class or category of contract of delegated authority must comply including conditions and requirements relating to information, provisions and terms to be included.
Intermediaries Byelaw, paragraph 30
Requirements relating to binding authorities
2. Every binding authority (other than a registered binding authority that authorises a coverholder to enter into a contract of insurance where the contract is in respect of motor business) shall contain the following information, provisions and terms and comply with the following conditions and requirements –
(a) an agreement number by which the binding authority can be identified;
(b) the name and address of each approved coverholder which is a party to the binding authority;
(c) the name and address of each Lloyd’s broker which is a party to the binding authority or which arranged or broked the binding authority;
(d) the syndicate or syndicates on whose behalf each managing agent is delegating authority to enter into contracts of insurance (the “syndicates”);
(e) the period of the binding authority, subject to binding authorities which have periods greater than 18 months must comply with such requirements as may be prescribed for the writing of continuous binding authorities;
(f) the name of the approved coverholder’s director or partner who is directly responsible, on behalf of the approved coverholder, for the overall operation and control of the binding authority;
(g) the name of the approved coverholder’s director, partner or employee who will have principal authority to enter into contracts of insurance under the binding authority;
(h) the name of the approved coverholder’s director, partner or employee (if any) who will have principal authority to issue documents evidencing contracts of insurance under the binding authority;
(i) the name of any person who will have principal authority to determine claims made on contracts of insurance entered into or to be administered by the approved coverholder under the binding authority;
(j) a precise description of the nature or classification of the contracts of insurance that the approved coverholder will be authorised to enter into under the binding authority and any relevant exclusions and limitations;
(k) a list of the terms and conditions which must be incorporated in contracts of insurance entered into under the binding authority including -
(i) relevant wordings, exclusions and limitations;
(ii) the maximum period of cover;
(iii) the limits of liability (other than where inclusion of such a limit would be contrary to any applicable law); and
(iv) any applicable territorial wordings or general cover conditions as prescribed or endorsed by the Council;
(l) the maximum aggregate premium income limit in respect of all contracts of insurance that the approved coverholder may enter into under the binding authority;
(m) the maximum limits of liability in respect of contracts of insurance that the approved coverholder may enter into under the binding authority;
(n) the territorial limitations on the approved coverholder’s authority under the binding authority;
(o) provisions requiring the approved coverholder to report in respect of all premiums, paid claims, outstanding claims and expenses in respect of contracts of insurance entered into by class or category by the approved coverholder under the binding authority;
(p) provisions setting out how and when the payment and settlement of monies due from each of the parties to the binding authority should be made;
(q) provisions for the cancellation and termination of the binding authority including provisions that enable the binding authority to be terminated upon the Council giving such direction or order to the managing agent or approved coverholder;
(r) provisions relating to the ongoing obligations of the approved coverholder in the event that the binding authority expires or is terminated or cancelled for any reason;
(s) provisions setting out the jurisdiction and governing law for the settlement of disputes arising from the binding authority;
(t) provisions setting out any business continuity or disaster recovery arrangements of the approved coverholder;
(u) provisions to require the approved coverholder to produce to the Council or to any relevant regulatory body any information, documents, books, records and other materials which, in the opinion of the Council or the relevant regulatory body relate or purport to relate to the operation of the binding authority and to give to the Council or to any relevant regulatory body all reasonable facilities in its premises for the purpose of examining such materials;
(v) the manner or basis for the calculation of premiums, discounts, commissions, brokerages, fees, charges and expenses; and
(w) provisions setting out if the approved coverholder has authority and, if so, the scope of any such authority to sub-delegate in accordance with a contract of delegated authority.
Requirements made under the Intermediaries Byelaw, paragraph 10
Requirements relating to line slips and consortium agreements
3. Every line slip and consortium agreement shall contain the following information, provisions and terms and comply with the following conditions and requirements –
(a) a reference number or other method of identification by which the line slip or consortium agreement can be identified;
(b) in the case of line slips, the name and address of the Lloyd’s broker responsible for placing or administering the line slip;
(c) the syndicate or syndicates on whose behalf each managing agent is delegating authority to enter into contracts of insurance (the “syndicates”) and (if any) the authorised insurance companies that are delegating authority to enter into contracts of insurance;
(d) the managing agent or (if a line slip) authorised insurance company that is authorised to enter into contracts of insurance under the line slip or consortium agreement (the “slip leader”);
(e) the period of the line slip or consortium agreement which shall be no greater than 18 months from the date of inception;
(f) the maximum aggregate premium income limit in respect of all contracts of insurance that the slip leader may enter into;
(g) the maximum limits of liability in respect of contracts of insurance that the slip leader may enter into;
(h) the territorial limitations on the slip leader’s authority;
(i) provisions to ensure that each of the parties to the line slip or consortium agreement receive an appropriate level of information relating to the operation of the line slip or consortium agreement and of each contract of insurance entered into, including any amendments to thereto;
(ia) provisions setting out the authorities given under the line slip or consortium agreement to agree amendments to any contracts of insurance that may be entered into;
(j) provisions setting out how and when the payment and settlement of monies due from each of the parties to the line slip or consortium agreement should be made;
(k) provisions for the amendment, cancellation and termination of the line slip or consortium agreement by the parties;
(l) provisions setting out the jurisdiction and governing law for the settlement of disputes arising from the line slip or consortium agreement;
(m) a precise description of the nature or classification of the contracts of insurance that the slip leader will be authorised to enter into and any relevant exclusions and limitations; and
(n) the manner or basis for the calculation of premiums, discounts, commissions, brokerages, fees, charges and expenses.
Requirements made under Intermediaries Byelaw, paragraph 12A
Requirements relating to delegated claims administration agreements
4. Every delegated claims administration agreement and every contract of delegated authority delegating a managing agent’s authority to an approved coverholder to determine claims arising under contracts of insurance entered into or being administered by that approved coverholder in accordance with the terms of a binding authority shall contain the following information, provisions and terms and comply with the following conditions and requirements –
(a) an agreement number by which the agreement can be identified;
(b) the name and address of each party to the agreement including the syndicate or syndicates on whose behalf each managing agent is delegating authority to determine claims arising under contracts of insurance;
(c) the functions, duties and responsibilities of the approved coverholder or the approved delegated claims administrator that are relevant to its authority to determine claims. This shall include –
i. the level of the approved coverholder’s or the approved delegated claims administrator’s authority to determine claims (including the circumstances in which a claim shall be referred to the managing agent);
ii. details of the approved coverholder’s or the approved delegated claims administrator’s responsibility to investigate claims and where appropriate appoint external experts (including the circumstances in which the decision to appoint an external expert shall be referred to the managing agent) and take steps to ensure claims are defended as appropriate and to seek to make any recoveries;
iii. details of the approved coverholder’s or the approved delegated claims administrator’s responsibility to assess and review claim estimates;
iv. details of any applicable service levels or standards (including service standards for dealing with complaints and enquiries) where those service levels or standards shall be consistent with any applicable minimum standards prescribed by the Council from time to time;
(d) details of the manner by which any insurance monies are to be held, maintained and properly safeguarded;
(e) provisions requiring the approved coverholder or the approved delegated claims administrator or any of its directors or staff to meet any relevant professional competence standards;
(f) provisions requiring the approved coverholder or the approved delegated claims administrator to maintain records and documents in such manner and for such period as the managing agent may require or as may be required by any applicable legal or regulatory provision;
(g) provisions regarding the maintenance and security of confidential information;
(h) provisions requiring the approved coverholder or the approved delegated claims administrator to report to the managing agent in respect of paid claims, outstanding claims and expenses in such form and at such intervals as the managing agent may determine (taking into account any minimum standards the Council may from time to time make);
(i) provisions requiring the approved coverholder or the approved delegated claims administrator to produce to the managing agent or to any auditor or agent appointed by the managing agent any information, documents, books, records and other materials which, in the opinion of the managing agent relate or purport to relate to the operation of the agreement and to co-operate with the managing agent, auditor or agent;
(j) provisions requiring the approved coverholder or the approved delegated claims administrator to produce to any relevant regulatory body any information, documents, books, records and other materials which in the opinion of the relevant regulatory body relate or purport to relate to the operation of the agreement;
(k) provisions requiring the approved coverholder or the approved delegated claims administrator to notify the managing agent of any –
i. complaint or actual, pending or potential litigation;
ii. circumstance or development that may materially impact upon its ability to perform its functions under the claims agreement effectively and in compliance with applicable laws and regulations;
(l) provisions for the cancellation and termination of the agreement;
(m) provisions relating to the ongoing obligations of the approved coverholder or the approved delegated claims administrator in the event that the agreement expires or is terminated or cancelled for any reason;
(n) provisions setting out if the approved coverholder or approved delegated claims administrator has authority and, if so, the scope of any such authority to sub-delegate in accordance with a contract of delegated authority;
(o) provisions prohibiting the approved coverholder or the approved delegated claims administrator from subcontracting or assigning any of its rights, powers, functions or obligations under the agreement without the prior consent of the managing agent; and
(p) the jurisdiction and governing law that relates to the operation of the agreement.
The terms of the agreement referred to in paragraph [4. above] may be set out in one or more contractual documents.
Requirements made under Intermediaries Byelaw, paragraph 13
5. An approved coverholder or a managing agent shall not enter into or purport to enter into a contract of insurance or contract of delegated authority or issue or purport to issue a document evidencing a contract of insurance under a binding authority, consortium agreement or a line slip unless –
(a) each of the parties to the binding authority, consortium agreement or line slip have agreed to its terms and conditions; and
(b) the binding authority, consortium agreement or line slip complies with the conditions and requirements prescribed by the Council in accordance with [paragraph 1 in Consolidated Requirements Part 2 > General Operational Matters > Intermediaries > Delegated Authority > Contracts of delegated authority].
Requirements made under Intermediaries Byelaw, paragraph 14
Intermediaries Byelaw, paragraph 31
6. An approved delegated claims administrator shall not determine or purport to determine a claim or enter into a contract of delegated authority under a delegated claims administration agreement unless –
(a) each of the parties to the delegated claims administration agreement have agreed to its terms and conditions; and
(b) the delegated claims administration agreement complies with the conditions and requirements prescribed by the Council in accordance with [paragraph 1 in Consolidated Requirements Part 2 > General Operational Matters > Intermediaries > Delegated Authority > Contracts of delegated authority].
Intermediaries Byelaw, paragraph 31A
7. An approved coverholder, an approved delegated claims administrator or a managing agent shall not authorise, permit or cause any person to whom they delegate or subdelegate authority to enter into a contract of insurance or issue a document evidencing a contract of insurance or to determine a claim under a contract of delegated authority unless –
(a) each of the parties to the contract of delegated authority have agreed to its terms and conditions; and
(b) the contract of delegated authority complies with the conditions and requirements prescribed by the Council in accordance with [paragraph 1 in Consolidated Requirements Part 2 > General Operational Matters > Intermediaries > Delegated Authority > Contracts of delegated authority].
Intermediaries Byelaw, paragraph 31B
Registration of binding authorities and delegated claims administration agreements
8. An approved coverholder shall not enter into or purport to enter into a contract of insurance or a contract of delegated authority and shall not issue or purport to issue a document evidencing a contract of insurance under a binding authority until that binding authority has been registered in accordance with the requirements and procedures prescribed by the Council.
Intermediaries Byelaw, paragraph 32
9. An approved delegated claims administrator shall not determine or purport to determine a claim or enter into [a] contract of delegated authority under a delegated claims administration agreement until that delegated claims administration agreement has been registered in accordance with the requirements and procedures prescribed by the Council.
Intermediaries Byelaw, paragraph 32A