Lloyd's Market Association Bulletin

LMA18-046-TH  |  19 October 2018

Co-Lead Claims Agreement (LMA9157) 

This bulletin both introduces and publishes the co-lead claims agreement, to support the streamlining of the co-lead claims agreement process within the Lloyd’s market. 

Managing agents across the market are responsible for writing and servicing approximately 41% of business through delegated arrangements. It has therefore become imperative that the market continues to find ways of ensuring that claims service improves and remains competitive. In a subscription market it has been critical that a drive toward reducing touchpoints and multiple decisions within the claims agreement process has been supported. The introduction of Single Claims Agreement (SCAP) has been one example of that, whilst the implementation of the Co-Lead Claims Agreement (LMA9157) will also assist greatly in providing a flexible, efficient and faster claims agreement model for delegated business. 

Background

Over the past few years, there has been a move towards co-lead binding authority placements as well as traditional subscription placements. Whilst this allows the coverholder to build bespoke policies and to manage aggregate, this creates a challenge in the claims process and the related agreement model, meaning that each claim must be agreed by every co-lead in these arrangements. 

As a result of this, the LMA’s Binding Authority Strategic Claims Group (BASCG), in conjunction with the market, has drafted a model agreement clause that delivers a ‘claims scheme’ type framework around a particular series of co-lead arrangements, allowing the streamlining of the claims agreement process for specific binding authorities named under the agreement. 

 
LMA Guidance: Co-lead Claims Agreement
 


Co-lead Claims Agreement

Key features of the agreement  

  • a lead agreement party on behalf of all co-leads on a particular claim
  • a second lead if a complex claim is identified, aligning to the Lloyd’s claims scheme and allowing for a second pair of eyes to review complex claims
  • primacy over existing TPA arrangements solely in relation to the specific binders to ensure that if a TPA is appointed, they have consistent authority limits, soft triggers and loss funds
  • can be agreed at the inception of the binding authorities, or at a point throughout the lifetime of the binding authorities (potentially in relation to a catastrophe event, or to manage run off in a more efficient way).

Key benefits of the agreement

  • flexible approach to managing co-lead business on an account basis
  • reduced touchpoints and agreement parties throughout the claims agreement process
  • faster decision making and payments due to the streamlined agreement process
  • enhanced experience for brokers, TPA’s and our customers when transacting with Lloyd’s carriers.In order to allow for existing LMA endorsements to be used, an Interpretation clause has been drafted to align the language.

The agreement produced is a model agreement, and can be amended to suit particular commercial requirements. Please note that the LMA accept no responsibility for loss occasioned to any person acting or refraining from acting as a result of material contained in the model agreement and accompanying guidance.

The LMA will continue to work with Lloyd’s and the market to discuss the best options to support this agreement and modernise the end-to-end process between customer, broker, TPA and carrier(s), via the use of technology.

The LMA would like to thank all market practitioners and legal experts for their assistance in drafting the agreement, including; Walker Wilcox, Fields Howell and Ince & Co. If you have any queries regarding the agreement, please liaise directly with Tom Hamill: tom.hamill@lmalloyds.com or 0207 327 8377. 


Tom Hamill 
Manager, Claims & Delegated Authority Operation