Principles of relationship and service standards

2. The Council shall from time to time make and issue statements setting out –

(a) standards for the provision of services provided by the Society to underwriting agents; and

(b) arrangements for charging fees for those services.

^{Underwriting Byelaw, paragraph 11}

3. The Council may where it thinks reasonably necessary or appropriate require any underwriting agent or any approved run-off company or any class or group thereof to –

(a) comply with such principles and standards for the conduct or administration of insurance business as the Council may from time to time prescribe, recognise or endorse;

(b) implement such systems, protocols or arrangements for the conduct or administration of insurance business as the Council may from time to time prescribe, recognise or endorse.

^{Underwriting Byelaw, paragraph 12}

4. The Council has prescribed the following standards and arrangements for the conduct and administration of insurance business at Lloyd’s provided always that failure to comply with these standards and arrangements shall not invalidate or call into question any contract or agreement entered into by or on behalf of a managing agent or syndicate nor shall failure to comply with these standards and arrangements create any right of action or claim in any third party against a managing agent or syndicate, the authority to enforce compliance being exclusively vested in the Council –

(a) a managing agent shall not permit the syndicate stamp of a syndicate managed by it to be affixed to any contract or contracts of insurance unless –

  (i) the contract is in the format and has been completed in accordance with the guidance issued by the London Market Group (or any successor body fulfilling the same role) from time to time ;

  (ii) the contract is marked as “Exempt” from the format prescribed in paragraph (i) by reason of client requirement; or 

  (iii) the contract relates to motor business, personal lines business or term life insurance business and the contract will not be processed by LPSO Limited;

(b) a managing agent shall not permit the syndicate stamp of a syndicate managed by it to be affixed to any binding authority unless the binding authority has been completed in accordance with the relevant guidelines from time to time issued by the London Market Group (or any successor body fulfilling the same role);

(c) a managing agent shall not permit the syndicate stamp of a syndicate managed by it to be affixed to any line slip unless the line slip has been completed in accordance with the relevant guidelines from time to time issued by the London Market Group (or any successor body fulfilling the same role).

^{Requirements made under Underwriting Byelaw, paragraph 3A}

5. Lloyd’s has established a Volume Claims Service and, under that service, a managing agent may enter into arrangements with a service provider recognised and accredited by the Council as being suitable to determine claims within the scope of the service within the contractually required service standards.

In that context, in deciding whether a service provider is suitable at all times to be recognised as an accredited service provider the Council shall have regard to the following matters –

(a) whether the service provider is a competent, proficient and capable organisation to provide a volume claims service. In considering this the Council shall have regard to the following matters –

  (i) the service provider’s ISAE 3402 report (or other suitable report) prepared by a reputable professional services firm or such other report as may be determined by the Council;

  (ii) the quality of the service provider’s human resources including –

• the competence, knowledge, experience and reputation of the service provider’s directors;
• the competence, knowledge, experience and reputation of the service provider’s staff and, in particular, of the service provider’s claims adjusting staff and their knowledge and experience of –

    o    providing a volume claims service;
    o    the relevant classes of business; and 
    o    London market processes and systems;

  (iii) the adequacy of the service provider’s human resources including –

• the number of staff that the service provider will assign or dedicate to the provision of the volume claims service;
• how those staff will be organised and grouped including by geographical location;
• the service providers plans for managing workflow and the day to day and periodic peaks and troughs of demand; and
• he service provider’s plans and strategy for recruiting, retaining, developing, training and replacing staff;

  (iv) the quality and adequacy of the service provider’s other resources including –

• the quality, adequacy and compatibility of the service provider’s systems and information and technology systems and, in particular, of its systems for –

    o    the tracking and management of claims whilst they are being determined and the recording of the reasons for decisions;
    o    the setting, adjustment and recording of case reserves; and
    o    fraud and counter-fraud management , the handling of suspicious loss notifications and the reduction of ‘claims leakage’;
    o    the capturing and reporting of management information and data, in particular, for managing information relating to contractual service standards; 

• the quality and adequacy of the service providers accounting and invoicing arrangements; and
• its reliance on outsourced service providers or sub-contractors and the quality and adequacy of the governance supporting such arrangements;

  (v) the service provider’s approach and any track record in providing a volume claims service and in particular to –

• meeting the required service standards and complying the terms of the standard form of volume claims service contract; 
• claims and service management and to continuous improvement; 
• fraud and counter-fraud management , the handling of suspicious loss notifications and the reduction of ‘claims leakage’;
• to setting reserves in accordance with clear and concise processes, procedures and philosophy using clear and auditable documentation with appropriate management oversight and audit;
• appointing and managing third party experts including determining whether a third party expert is required, defining the third party’s instructions and objectives;
• identifying breaches of international sanctions by policyholders, claimants or beneficiaries of claims payments; and
• maintaining appropriate claims files.

(vi) the quality and adequacy of the service providers’ compliance arrangements and, in particular, its arrangements for –

• business continuity and disaster recovery arrangements;
• arrangements for the identification, disclosure and management of conflicts of interest;
• data protection compliance;
• complaints reporting having to regard Lloyd’s requirements;
• Lloyd’s claims management principles and minimum standards; 
• sanctions monitoring; and
• other legal and regulatory compliance including compliance with the Bribery Act;

(b) the service provider’s solvency and the adequacy of its financial resources and professional indemnity insurance;

(c) the service provider’s standing and reputation and the standing and reputation of its controllers;

(d) the suitability of the location of the service provider’s premises from which services will be provided; and 

(e) the quality of the service provider’s –

• relationship management arrangements;
• outsources service providers and sub-contractors;
• risk management and insurance arrangements; 
• claims quality assurance framework; and
• compliance with appropriate principles of good corporate governance.

^{Requirements made under Underwriting Byelaw, paragraph 3B}

6. The Council has prescribed the Principles for Doing Business at Lloyd’s, which set out the fundamental responsibilities expected of all managing agents.

^{Requirements made under Underwriting Byelaw, paragraph 3C}

The Council may where it thinks reasonably necessary or appropriate direct that any member, underwriting agent, substitute agent or approved run-off company or any class or group thereof shall use any service specified in the Council’s direction whether such service is provided or is to be provided by the Society or by any other person.

^{Underwriting Byelaw, paragraph 13}

The following Codes have been issued under paragraph 31 of the Underwriting Byelaw.