Intermediaries

Delegation of authority to enter into contracts of insurance 
1. A managing agent shall not delegate its authority to enter into contracts of insurance to be underwritten by the members of a syndicate managed by it to any person other than –

(a) to a director or employee of the managing agent or, with the consent of the Council, to any other individual engaged to provide services to the managing agent; 

(b) to another managing agent or authorised insurance company in accordance with the terms of a line slip; 

(c) to another managing agent in accordance with the terms of a consortium agreement; 

(d) to an approved coverholder in accordance with the terms of a binding authority; 

(e) to such other person or class or category of persons as the Council may permit in accordance with the terms of a contract of delegated authority;

(f) to the Society, or a representative or agent of the Society; or

(g) in accordance with any other of the requirements of the Council.

^{Intermediaries Byelaw, paragraph 1}

2. Any person, other than the Society, to whom authority to enter into contracts of insurance to be underwritten by members of a syndicate has been delegated in accordance with paragraph 1 shall not sub-delegate that authority other than –

 (a) to a director, partner or employee of that person or, with the consent of the Council, to any other individual engaged to provide services to that person; or

 (b) to any of the persons and in accordance with such specified contract of delegated authority as is listed in paragraph 1 (b) to (g), 

save that the Council may from time to time prescribe conditions and requirements as to the sub-delegation of authority in accordance with this paragraph by or to any person or class or category of persons (which may include prohibiting the sub-delegation of authority).

^{Intermediaries Byelaw, paragraph 2}

Delegation of authority to issue insurance documentation 
3. A managing agent shall not delegate its authority to issue documents evidencing contracts of insurance underwritten by the members of a syndicate managed by it to any person other than to –

(a) the LPSO;

(b) a director or employee of the managing agent or, with the consent of the Council, to any other individual engaged to provide services to the managing agent; 

(c) another managing agent or an authorised insurance company in accordance with the terms of a line slip; 

(d) another managing agent in accordance with the terms of a consortium agreement;

(e) an approved coverholder in accordance with the terms of a binding authority;

(f) to such other person or class or category of persons as the Council may permit in accordance with the terms of a contract of delegated authority; or

(g) the Society, including for the purpose of issuing or otherwise making available insurance certificates in accordance with the Marine Insurance Certificates Byelaw (No. 3 of 2002), or a representative or agent of the Society,

^{Intermediaries Byelaw, paragraph 3}

4. Any person, other than the Society or LPSO to whom authority to issue documents evidencing contracts of insurance underwritten on behalf of the members of a syndicate has been delegated in accordance with paragraph 3 shall not sub-delegate that authority other than –

(a) to a director, partner or employee of that person or, with the consent of the Council, to any other individual engaged to provide services to that person; or

(b) to any of the persons and in accordance with such specified contract of delegated authority as is listed in paragraph 3 (a) and (c) to (g), 

save that the Council may from time to time prescribe conditions and requirements as to the sub-delegation of authority in accordance with this paragraph by or to any person or class or category of person (which may include prohibiting the sub-delegation of authority).

^{Intermediaries Byelaw, paragraph 4}

Delegation of authority to determine claims 
5. A managing agent shall not delegate its authority to determine claims on contracts of insurance underwritten by the members of a syndicate managed by it to any person other than –

 (a) to a director or employee of the managing agent or, with the consent of the Council, to any other individual engaged to provide services to the managing agent; 

 (b) to another managing agent in accordance with such requirements as the Council may prescribe;

 (c) to another managing agent or authorised insurance company in accordance with the terms of a line slip; 

 (d) to another managing agent in accordance with the terms of a consortium agreement; 

 (e) to an approved delegated claims administrator in accordance with the terms of a delegated claims administration agreement;

 (f) an approved coverholder where the contract of insurance has been entered into or is being administered by that approved coverholder in accordance with the terms of a binding authority;

 (g) to an approved run-off company in accordance with the terms of a contract of delegated authority;

 (h) to a Lloyd’s claims settling agent in accordance with the terms of a contract of delegated authority;

 (i) a lawyer or firm of lawyers qualified to practice law under the laws and regulations where they are located in accordance with the terms of a contract of delegated authority;

 (j) to such other person or class or category of persons as the Council may permit in accordance with the terms of a contract of delegated authority; or

 (k) to the Society, or a representative or agent of the Society.

^{Intermediaries Byelaw, paragraph 4A}

6. Any person, other than the Society, to whom authority to determine claims on contracts of insurance underwritten by members of a syndicate has been delegated in accordance with paragraph 4A shall not sub-delegate that authority other than –

 (a) to a director, partner or employee of that person or, with the consent of the Council, to any other individual engaged to provide services to that person; or

 (b) to any of the persons and in accordance with such specified contract of delegated authority as is listed in paragraph 4A (c) to (j),

save that the Council may from time to time prescribe conditions and requirements as to the sub-delegation of authority in accordance with this paragraph by or to any person or class or category of person (which may include prohibiting the subdelegation of authority).

^{Intermediaries Byelaw, paragraph 4B}

Sub-delegation of authority – paragraphs 2, 4 and 4B of the Intermediaries Byelaw 
7. Except where permitted in the ‘Code of Practice – Delegated Authority’, as amended from time to time and in accordance with any conditions and requirements set out there, or where otherwise permitted by the Council –

 (a) no person to whom authority has been delegated to enter into contracts of insurance to be underwritten by the members of a syndicate in accordance with paragraph 1 (d) or (e) of the Intermediaries Byelaw, other than a service company coverholder, shall sub-delegate that authority pursuant to paragraph 2 (b) of the Intermediaries Byelaw.

 (b) no person to whom authority has been delegated to issue documents evidencing contracts of insurance underwritten by the members of a syndicate in accordance with paragraph 3 (e) or (f) of the Intermediaries Byelaw, other than a service company coverholder, shall sub-delegate that authority pursuant to paragraph 4 (b) of the Intermediaries Byelaw.

 (c) no person to whom authority has been delegated to determine claims on contracts of insurance underwritten by the members of a syndicate in accordance with paragraph 4A (e) to (j) of the Intermediaries Byelaw, other than a service company coverholder, shall sub-delegate that authority pursuant to paragraph 4B (b) of the Intermediaries Byelaw.

and references in these Requirements to sub-delegation shall, except where the context requires otherwise, apply only to the extent that sub-delegation is not prohibited by this paragraph.

^{Requirements made under Intermediaries Byelaw, paragraph A1}

Approved coverholders and approved delegated claims administrators: Applications for approval 

8. Any company or partnership that wishes to be approved as an approved coverholder or as an approved delegated claims administrator (an “applicant”) may apply to the Council. Applications shall be made in accordance with such procedures and shall be accompanied by such documents and information as the Council may from time to time prescribe.

^{Intermediaries Byelaw, paragraph 8}

9. The Council may require an applicant, which is not a Lloyd’s broker, to be sponsored by a Lloyd’s broker or a managing agent (the “sponsor”).

^{Intermediaries Byelaw, paragraph 9}

10. At any time after receiving an application, the Council may, in connection with the consideration of the application, require – 

 (a) the applicant;

 (b) any sponsor; or 

 (c) any managing agent which proposes to enter into a binding authority or delegated claims administration agreement with the applicant, 

or any of the directors, partners and employees of any such person to –

  (i) provide information, documents, books, records and other materials;

  (ii) answer questions;

  (iii) give undertakings or make declarations to the Council;

  (iv) attend before the Council or any representative or agent of the Society; 

  (v) permit the Council or any representative or agent of the Society to attend at the applicant’s business premises to inspect, review or assess the applicant’s business operations, books and records and to pay or contribute to the costs of that inspection, review or assessment; 

  (vi) provide funds or other security (including, but not limited to letters of credit, charges or guarantees) for the settlement and payment of insurance transactions incurred by it.

^{Intermediaries Byelaw, paragraph 10}

11. An applicant shall apply to the Council for approval as an approved coverholder or approved delegated claims administrator by completing the relevant parts of the appropriate form of application which shall be completed and submitted by means of the electronic system the Council operates for that purpose or by such other means as the Council may permit.

^{Requirements made under Intermediaries Byelaw, paragraph 4}

12. Any applicant, which is not a Lloyd’s broker, must be sponsored by a Lloyd’s broker or a managing agent (the “sponsor”). The sponsor shall complete the relevant part of the appropriate form of application.

^{Requirements made under Intermediaries Byelaw, paragraph 5}

Approval 
13. The Council may consider applications for approval as an approved coverholder or approved delegated claims administrator and grant or refuse any such approval.

Upon granting any such approval the name of the applicant shall be entered into the register of approved coverholders or approved delegated claims administrator, as applicable.

^{Intermediaries Byelaw, paragraph 11}

14. The Council shall not approve an applicant as an approved coverholder or approved delegated claims administrator unless the applicant has demonstrated to the Council that it is suitable to be approved as such.

^{Intermediaries Byelaw, paragraph 12}

15. In deciding whether an applicant is suitable to be approved as an approved coverholder or as an approved delegated claims administrator the Council shall have regard to such criteria as it may from time to time prescribe for all or any class or category of applicants.

^{Intermediaries Byelaw, paragraph 13}

16. The Council shall not approve an application to become an approved coverholder unless the applicant can demonstrate that, upon approval, it has a reasonable expectation of entering into a binding authority and the Council is satisfied that the syndicate for whose members any contracts of insurance are to be underwritten is managed by a managing agent that has the capabilities and competencies to underwrite the business in question through that applicant.

^{Intermediaries Byelaw, paragraph 13A}

17. A person shall not hold itself out as being an approved coverholder or as an approved delegated claims administrator unless its name appears in the register of approved coverholders or the register of approved delegated claims administrators, as applicable.

^{Intermediaries Byelaw, paragraph 14}

18. The approval of a person as an approved coverholder or as an approved delegated claims administrator may be –

 (a) subject to that person entering into a binding authority or delegated claims administration agreement to be registered in accordance with this Byelaw within such period as the Council may specify;

 (b) subject to the provision of undertakings or declarations from such persons as the Council may require;

 (c) for a specific or an indefinite period;

 (d) in the case of approved coverholders, subject to that person being classified as a service company coverholder.

^{Intermediaries Byelaw, paragraph 15}

19. In deciding whether an applicant is suitable to be an approved coverholder or approved delegated claims administrator the Council shall, taking into account the particular characteristics of the applicant’s business, have regard to the following criteria and all other relevant matters – 

 (a) whether the applicant is a competent, proficient and capable organisation and in considering that the Council may have regard to the following matters –

  (i) the applicant’s compliance with appropriate principles of good corporate governance;

  (ii) the applicant’s membership of any body or organisation that the Council considers to be necessary or desirable;

  (iii) the quality and adequacy of the applicant’s human resources including – 

      (i) the competence, reputation, character and suitability of the applicant’s directors, officers and staff; and

      (ii) the knowledge and experience of the applicant’s directors, officers and staff of the conduct and regulation of insurance business in the Lloyd’s insurance market and in any other relevant jurisdiction;

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

      (i) systems, procedures, protocols and arrangements for the conduct of its business;

      (ii) resources to comply with appropriate service standards for its customers;

      (iii) resources to comply with such principles and standards for the conduct or administration of insurance business in the Lloyd’s insurance market as the Council may from time to time prescribe, recognise or endorse; and

      (vi) resources and systems for underwriting administration or, as applicable, for the determination of claims;

  (v) the quality and adequacy of the applicant’s controls and procedures to manage its business including –

      (i) the applicant’s arrangements for identifying, resolving or managing conflicts of interest; 

      (ii) the applicant’s procedures for its conduct with customers (including procedures to ensure a fair outcome for consumers); and

      (iii) the quality and adequacy of the applicant’s controls and procedures for the management of underwriting risk, for the management of the determination of claims and for the handling and recording of complaints;

  (vi) the nature of the applicant’s business including, in the case of an applicant to be an approved coverholder, its past, present and forecast underwriting performance;

 (b) whether the applicant is of appropriate reputation and standing;

 (c) whether any person who controls the applicant or who is connected or associated with the applicant is of appropriate reputation and standing;

 (d) whether the applicant has adequate capital and financial resources;

 (e) whether the applicant has adequate professional indemnity insurance;

 (f) whether the applicant is capable and willing to comply with the terms of any undertaking given by it to the Council; and

 (g) whether the applicant possesses all the licences, approvals or authorisations in order to act as an approved coverholder or approved delegated claims administrator wherever it will conduct insurance business in that capacity.

^{Requirements made under Intermediaries Byelaw, paragraph 6}

20. A managing agent that intends to enter into a binding authority or delegated claims administration agreement with the applicant must, in accordance with paragraph 15 (b) of the Intermediaries Byelaw, complete the declaration or provide such other confirmation as the Council may require.

^{Requirements made under Intermediaries Byelaw, paragraph 7}