Receipt and assignment of claims

1. Upon receiving notification of a CLA claim, the managing agent of the leading Lloyd’s syndicate will ascertain whether it has been properly identified as the leading Lloyd’s syndicate in respect of the insurance to which the CLA claim relates has been submitted and, if so, shall –

(a) acknowledge receipt of the CLA claim to the insured or its agent;

(b) where there are other Lloyd's slips within the same layer which are written on substantially the same terms through the same Lloyd’s broker, use its best endeavours to agree with the managing agents of the other leading Lloyd’s syndicates which syndicate, if any, will coordinate and act as the leading Lloyd’s syndicate for that layer and, in respect of any complex claim (as defined in sub-paragraph (d) below), which syndicate, if any, will coordinate and act as the second Lloyd’s syndicate; and

(c) review any CLA claim information presented with the notification and if not provided, request: (i) appropriate evidence of the insurance under which notification was submitted; and (ii) such preliminary CLA claim information as appears reasonably necessary to take the next step and commence determination of the CLA claim; 

(d) assess and decide based on the information currently in hand and solely for assignment purposes whether:

(i) the amount likely to be claimed by the insured from the leading Lloyd’s syndicate and the following Lloyd’s syndicates is equal to or more than the amount shown in column 4 of Lloyd’s Claims Lead Arrangements: Risk Codes corresponding to the applicable risk code shown in column 1 of Lloyd’s Claims Lead Arrangements: Risk Codes (a “complex claim”); or

(ii) the amount likely to be claimed by the insured from the leading Lloyd’s syndicate and the following Lloyd’s syndicates is less than the amount shown in column 4 of Lloyd’s Claims Lead Arrangements: Risk Codes corresponding to the applicable risk code shown in column 1 of Lloyd’s Claims Lead Arrangements: Risk Codes (a “standard claim”)

provided, however, that the managing agent of the leading Lloyd’s syndicate shall initially assign a standard claim as a complex claim where required to do so in accordance with such additional non-financial criteria as Lloyd’s may from time to time prescribe;

(e) in respect of a complex claim, take appropriate steps to inform the managing agent of the second Lloyd’s syndicate of the receipt of the CLA claim and provide the claims information which it has received; and 

(f) take appropriate steps to inform the managing agents of the following Lloyd’s syndicates of the receipt of the CLA claim.

^{Lloyd’s Claims Lead Arrangements, paragraph 2}

2. Non-financial criteria

Even if a claim falls below the relevant financial thresholds set out above, a claim nevertheless must initially be assigned as complex if any one or more of the following applies. These criteria are prescribed by Lloyd’s in accordance with paragraph 2(d) [of the CLA] and are mandatory:

• Dispute Resolution Proceedings (DISP): There are actual or pending (or are likely to be) dispute resolution proceedings between the policyholder and the participating Lloyd’s syndicates in relation to the claim. This will include (but is not limited to) any dispute resolution proceedings involving contested denials, disputes as to quantum, claims by the participating Lloyd’s syndicates to avoid the insurance. Dispute resolution proceedings for these purposes may be before any court, arbitration tribunal or financial ombudsman (or equivalent in the local jurisdiction). It includes proceedings against the insured that also names insurers as a party.
• Claims for extra contractual damages or excess of policy limits claims (ECON): The claim includes demands for extra contractual damages (including punitive damages) or damages in excess of policy limits (including allegations of bad faith).
• Regulatory breach or investigation (REGU): There are allegations of potential breach(es) of regulation made against the participating Lloyd’s syndicates or there is a notification by a body asserting regulatory authority of an intention to conduct an investigation of the managing agents of the participating Lloyd’s syndicates in relation to matters connected with the claim.

^{Guidance on the Lloyd’s Claims Lead Arrangements, paragraph 2.19}

Reassignment of CLA claims

1. The managing agent of the leading Lloyd’s syndicate shall reassign a standard claim as a complex claim at any time that the amount likely to be claimed by the insured from the leading Lloyd’s syndicate and the following Lloyd’s syndicates in aggregate increases so it is equal to or more than the amount shown in column 4 of Lloyd’s Claims Lead Arrangements: Risk Codes corresponding to the applicable risk code shown in column 1 of Lloyd’s Claims Lead Arrangements: Risk Codes or where required to do so in accordance with such additional non-financial criteria as Lloyd’s may from time to time prescribe.

^{Lloyd’s Claims Lead Arrangements, paragraph 3}

2. The managing agents of the leading Lloyd’s syndicate and the second Lloyd’s syndicate shall together reassign a complex claim as a standard claim at any time that the claim ceases to be a complex claim or if they reasonably consider that it would be appropriate in all of the circumstances subject to such guidance as Lloyd’s may from time to time prescribe. Upon reassignment of the CLA claim as a standard claim the managing agent of the second Lloyd’s syndicate’s obligation to determine the claim in accordance with paragraphs [1. and 2. in Claims determination – complex claims] below shall cease. Where the managing agents of the leading Lloyd’s syndicate and the second Lloyd’s syndicate decide that it would be appropriate in all the circumstances for a complex claim to be reassigned as a standard claim then the managing agent of the leading Lloyd’s syndicate is not required to reconsider the assignment of the CLA claim unless, in the reasonable view of that managing agent, the reason for the reassignment of the CLA claim as a standard claim no longer applies or there is a new reason to reassign the claim as a complex claim.

^{Lloyd’s Claims Lead Arrangements, paragraph 4}

Claims determination – standard claims

A standard claim shall be determined by the managing agent of the leading Lloyd’s syndicate on behalf of the leading Lloyd’s syndicate and each of the following Lloyd’s syndicates. Subject to Lloyd’s Claims Lead Arrangements: Limits of liability, in determining a CLA claim on behalf of the members of the following Lloyd’s syndicates (including where the managing agent has delegated the determination of a CLA claim under paragraph 3. in Lloyd’s Claims Lead Arrangements: Claims determination: general), the managing agent of the leading Lloyd’s syndicate, shall exercise the reasonable care of a reasonably competent managing agent.

^{Lloyd’s Claims Lead Arrangements, paragraph 5}

Claims determination – complex claims

1. A complex claim shall be determined by the managing agent of the leading Lloyd’s syndicate in agreement with the managing agent of the second Lloyd’s syndicate.

^{Lloyd’s Claims Lead Arrangements, paragraph 6}

2. In the determination of a complex claim, (i) the managing agent of the leading Lloyd’s syndicate shall act on behalf of the leading Lloyd’s syndicate and the following Lloyd’s syndicates (other than the second Lloyd’s syndicate), and (ii) the managing agent of the second Lloyd’s syndicate shall act on behalf of the second Lloyd’s syndicate and the following Lloyd’s syndicates. Subject to Lloyd’s Claims Lead Arrangements: Limits of liability, in determining a CLA claim on behalf of the members of the following Lloyd’s syndicates (including where the managing agent has delegated the determination of a CLA claim under paragraph 10), the managing agents of the leading Lloyd’s syndicate and the second Lloyd’s syndicate shall exercise the reasonable care of a reasonably competent managing agent.

^{Lloyd’s Claims Lead Arrangements, paragraph 7}

Claims determination – general

1. Every managing agent shall act in accordance with Lloyd’s Principles of Doing Business for Claims Management.

^{Lloyd’s Claims Lead Arrangements, paragraph 8}

2. Where a managing agent is required to act on behalf of a following Lloyd’s syndicate under the terms of these Claims Lead Arrangements (whether as the managing agent of the leading Lloyd's syndicate or of the second Lloyd's syndicate), then it must act in the best interest of all syndicates on whose behalf it acts. If the managing agent concludes that it cannot do so, then it must notify the managing agents of the Lloyd’s syndicates underwriting the insurance and (subject to any guidance Lloyd’s may from time to time prescribe) the managing agent of the next following Lloyd’s syndicate in slip order (which, in the case of the managing agent of the leading Lloyd’s syndicate shall be the managing agent of the second Lloyd’s syndicate) shall take its place for the purposes of the Claims Lead Arrangements (and the assignment of leading Lloyd’s syndicate, second Lloyd’s syndicate and following Lloyd’s syndicate shall be adjusted accordingly and as necessary). Lloyd’s may prescribe requirements for resolving any disagreements between managing agents of syndicates that underwrote an insurance that may arise regarding the proper application of this paragraph.

^{Lloyd’s Claims Lead Arrangements, paragraph 9}

3. The managing agents of the leading Lloyd’s syndicate and, on complex claims, the second Lloyd’s syndicate may each delegate their determination of a CLA claim to another person, provided that the delegation complies with Lloyd’s requirements for the delegation of the determination of claims and is properly documented.

^{Lloyd’s Claims Lead Arrangements, paragraph 10}

4. Managing agents can sometimes face difficult decisions as to whether they can properly act for the following market. As a result, disagreements can arise as to whether a managing agent should have authority under the CLA to determine claims. In such a case, Lloyd’s has prescribed the following requirements as provided for by paragraph [2. above].

• If a disagreement arises between managing agents as to whether the managing agent of the leading Lloyd’s syndicate or, on a complex claim, the managing agent of the second Lloyd’s syndicate can act as a claims agreement party on behalf of the following syndicates in compliance with paragraph 9 [2. above], then the disagreement shall first be referred to senior representatives of the managing agents involved in the disagreement who shall meet in a good faith effort to resolve the disagreement. If resolution is not achieved within 14 days from the date the disagreement was referred to these individuals, the matter shall be escalated to a board member responsible for claims at each managing agent who shall attempt to resolve the matter.
• If the disagreement is not resolved following compliance with step 1, the disagreement shall be referred to Lloyd’s and Lloyd’s may, at its discretion, appoint King’s Counsel to give an opinion on the matter in dispute. Any managing agent of a syndicate that underwrote the insurance that wishes to shall, either individually or jointly with other managing agents, be entitled to make written representations to the King’s Counsel in accordance with such directions as Lloyd’s may make. Lloyd’s, in its discretion, may also provide for the managing agents to make oral representations to the King’s Counsel. All managing agents of syndicates that underwrote the insurance shall be entitled to see all written material provided to or by the King’s Counsel and to attend at any oral representations. The King’s Counsel shall promptly, on the basis of the information provided and representations made, issue an opinion on the matter in dispute which shall include an opinion as to whether the managing agent subject to the dispute should remain as a claims agreement party. The costs of the King’s Counsel will be borne, unless otherwise agreed, equally by the managing agents whose position the King’s Counsel disagreed with.
• If the opinion of King’s Counsel is not accepted by the managing agents whose position the King’s Counsel disagreed with, then Lloyd’s may make such directions for the future determination of the claim, in accordance 

with the CLA as it considers appropriate (which may include directing that a managing agent shall cease acting as a claims agreement party or that the CLA shall not apply to the claim). While Lloyd’s shall take into account the opinion of the King’s Counsel, it shall not be required to follow any particular course of action advised by the King’s Counsel.

^{Guidance on the Lloyd’s Claims Lead Arrangements, paragraph 3.25}

5. Where considerations of a potential conflict of interest arise in relation to a following Lloyd’s syndicate as a result of which it may not be appropriate for the managing agent of that syndicate to receive information relating to the claim from the managing agent(s) that are determining the claim, Lloyd’s will, on an application, consider giving a dispensation to disapply the application of the CLA for that syndicate in respect of that claim.

^{Guidance on the Lloyd’s Claims Lead Arrangements, paragraph 3.26}