It is a UK regulatory requirement that managing agents must not permit both general insurance business and long term insurance business (which includes all life insurance) to be carried on together through any syndicate managed by them. It is also a requirement that amounts received or receivable in respect of general insurance business and long term business must be carried to separate premium trust funds.
A number of policies are written by general syndicates in the A&H and contingency market where the contract, amongst other covers provided, may be triggered by the death of an individual (other than accidental death). Typically, in conjunction with other causes of financial loss, these products provide an indemnity for a contractual loss suffered by the insured arising from the death of a named individual. For example, a contingency policy may include cover for a concert promoter for the cost of cancelling an event as a result of the death of the performer.
The particular features of these policies mean that extra care must be taken to ensure that the risks written are appropriate for a general insurance syndicate.
To evidence compliance with the relevant PRA regulations, Lloyd’s anticipates that managing agent wishing to write this type of risk will ensure they have suitable legal advice confirming that the business may properly be written by a syndicate writing general insurance business. In obtaining any legal opinion the managing agent should provide copies of its standard contract wordings for review.
Where the risks are located in overseas territories which are the subject of local regulation, managing agents must additionally ensure compliance with the equivalent local regulatory requirements.
Performance Management – Supplemental Requirements and Guidance, pages 26-27