Run-off

2. The Council may require a managing agent to prepare and submit to the Council a run-off contingency plan in respect of any syndicate or syndicates managed by it.

^{Underwriting Byelaw, paragraph 76}

3. The Council may require a managing agent or a substitute agent to prepare and submit to the Council a run-off closure plan in respect of any run-off syndicate or run-off account managed or to be managed by it. The run-off closure plan shall include information relating to any association or underwriting transaction which may give rise to a conflict of interest including a transaction where a counterparty or an intermediary is a member of the managing agent’s or substitute agent’s own group and a statement confirming that it has systems and controls in place for managing any such conflicts of interest fairly in accordance with applicable Lloyd’s requirements and any applicable Prudential Regulation Authority’s requirements and Financial Conduct Authority’s requirements. The managing agent or substitute agent shall make this information and statement available to the members of the relevant syndicate (or to their members’ agents).

^{Underwriting Byelaw, paragraph 77}

4. The Council may for the purposes of [paragraphs 2. and 3. above] prescribe requirements in respect of run-off contingency plans and run-off closure plans. The requirements may make different requirements for run-off contingency plans and run-off closure plans. The requirements may include –

(a) the period or periods in which each plan is to be prepared and submitted to the Council;

(b) the format and content of each plan;

(c) the methods and assumptions to be used in the preparation of each plan;

(d) that each plan is prepared by a person with the necessary skills, expertise and experience; and

(e) the date or dates on which each plan is to be submitted to the Council.

^{Underwriting Byelaw, paragraph 78}

5. A managing agent or substitute agent may at any time submit a request to amend an agreed run-off contingency plan or an agreed run-off closure plan in respect of a syndicate managed by it. The Council may prescribe requirements in respect of such requests which may include the format of requests.

^{Underwriting Byelaw, paragraph 79}

6. The Council may at any time direct or require a managing agent or a substitute agent to submit such further information, explanation or justification in connection with a run-off contingency plan, agreed run-off contingency plan, run-off closure plan or agreed run-off closure plan or a request to amend any such plan as the Council may specify.

^{Underwriting Byelaw, paragraph 80}

7. The Council may –

(a) agree to a run-off contingency plan or to a run-off closure plan;

(b) agree to a request to amend an agreed run-off contingency plan or an agreed run-off closure plan;

(c) reject a run-off contingency plan or a run-off closure plan and require a managing agent or a substitute agent to submit a new or revised plan within such period as the Council may specify; 

(d) reject a request to amend an agreed run-off contingency plan or an agreed run-off closure plan;

(e) withdraw its agreement to an agreed run-off contingency plan or an agreed run-off closure plan and require the managing agent or substitute agent to submit a new or revised plan within such period as the Council may specify.

^{Underwriting Byelaw, paragraph 81}

8. The Council shall not agree to a run-off contingency plan or to a run-off closure plan or to a request to amend an agreed run-off contingency plan or a run-off closure plan unless the managing agent or the substitute agent in question has demonstrated to the Council’s satisfaction that the plan is appropriate and justifiable having regard to the performance and capabilities of the managing agent or substitute agent in question and such other criteria as the Council may from time to time prescribe.

^{Underwriting Byelaw, paragraph 82}

9. An agreed run-off contingency plan shall be deemed to amend and be part of the corresponding agreed business plan relating to the syndicate in question.

^{Underwriting Byelaw, paragraph 83}

10. A substitute agent shall only carry out the management of a run-off syndicate or a run-off account in accordance with an agreed run-off closure plan.

^{Underwriting Byelaw, paragraph 84}

11. The Council may at any time require a managing agent or substitute agent which manages a run-off syndicate or a run-off account to prepare and submit a run-off monitoring report. The Council may prescribe requirements for run-off monitoring reports which may include –

(a) the period or periods to which each report is to relate;

(b) the format and content of each report;

(c) the methods and assumptions to be used in the preparation of each report; and

(d) the date or dates on which each report is to be submitted to the Council.

^{Underwriting Byelaw, paragraph 85}

12. The Council may for the purposes of [paragraph 13. below] from time to time prescribe functions undertaken in the management of a syndicate which shall be called executive functions, insurance functions and administrative and processing functions.

^{Underwriting Byelaw, paragraph 86}

13. The following functions undertaken in the management of a run-off syndicate or a run-off account shall be called executive functions –

(a) responsibility for syndicate strategy, including –

  (i) approval of forecasts and budgets;

  (ii) claims reserving and commutation policy and approval;

  (iii) annual solvency and syndicate accounts;

  (iv) compliance with the requirements of the Council;

  (v) management and control of expenses;

(b) reporting and accounting to members;

(c) performance of duties under premiums trust deed – including (but not limited to) investment management policy;

(d) management of conflicts of interest between syndicates and years of account; and

(e) responsibility for the performance of any delegated or sub–contracted functions.

^{Requirements Made Under the Underwriting Byelaw, paragraph 13}

14. The following functions undertaken in the management of a run-off syndicate or a run-off account shall be called insurance functions –

(a) claims adjusting;

(b) identifying reinsurance recoveries;

(c) purchasing reinsurance;

(d) evaluating reinsurance security;

(e) effecting commutations, negotiations and set–off of inwards and outwards business;

(f) preparing and maintaining reserving and actuarial data; and

(g) undertaking cash and investment management.

^{Requirements Made Under the Underwriting Byelaw, paragraph 14}

15. The following functions undertaken in the management of a run-off syndicate or a run-off account shall be called administrative and processing functions –

(a) maintaining policy risk records;

(b) administering and processing claims;

(c) aggregating claims and calculating reinsurance recoveries;

(d) credit control in collecting reinsurance recoveries; and

(e) maintaining statistical records.

^{Requirements Made Under the Underwriting Byelaw, paragraph 15}

16. Save where the Council otherwise permits or directs, no managing agent or substitute agent shall delegate any of its executive functions, insurance functions or administrative and processing functions in respect of a run-off syndicate or a run-off account managed by it –

(a) without the Council’s prior consent; and

(b) otherwise than to an approved run-off company or another managing agent.

^{Underwriting Byelaw, paragraph 87}

17. The Council may require a managing agent or a substitute agent to comply with such requirements and procedures as it may from time to time prescribe prior to delegating any of its executive functions, insurance functions or administrative and processing functions to an approved run-off company or another managing agent. The requirements may include obtaining a number of competitive quotes for the performance of the functions in question following a formal tendering process.

^{Underwriting Byelaw, paragraph 88}

18. No managing agent shall delegate any of its executive functions, insurance functions or administrative and processing functions to another managing agent or to an approved run-off company other than by way of a written contract which shall contain such terms and provisions and be in such form as the Council may from time to time prescribe.

^{Underwriting Byelaw, paragraph 89}

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