Coverholder Audit

Coverholder audit is a key component of the monitoring process of delegated authorities. The Lloyd’s market has been moving towards more common audit practices across managing agents since 2010, firstly with the creation of versions 1 and 2 of the Lloyd’s Common Audit Scope, then with increased coordination of the audit process itself.

Coverholder Audit Scope Pilot:

A new audit scope has been designed to build on the work undertaken by Lloyd’s in this arena. LMA members in conjunction with the LMA executive and Lloyd’s have drafted the scope to ensure that risks are reviewed and assessed in a way that is proportionate to the nature of the coverholder and the portfolio of business that they are underwriting. The scope has now completed an extensive consultation with the market, and is being published on this page for use in a pilot phase which will run until mid Q3 2017.

 For managing agents that are intending to use the new scope to instruct coverholder audits during this period, please inform the coverholder audit team at Lloyd’s:, and Tom Hamill at the LMA: Both Lloyd’s and the LMA are keen that the usage of the scope be monitored and updated throughout the pilot where necessary, so any London market participants and auditors will be asked to complete a short feedback form. Please note that there may be minor revisions to the scope due to feedback throughout this period.

Further communications will be issued later in the year when the scope exits the pilot phase. It is intended that the scope will be updated on an annual basis following this, with additional appendices also to be added over time.

This audit scope is purely illustrative and distributed for the guidance of members, who are free to use any audit scope to oversee their coverholders. The LMA accepts no responsibility for any loss occasioned to any person acting or refraining from acting as a result of material contained in these documents.

Where managing agents have questions regarding the scope please contact the LMA or the coverholder audit team at Lloyd’s. Auditors and other market participants with questions regarding the scope should route any questions through the instructing managing agent.

Audit Scope:

Scope - Pilot v1.0 

Guidance - Pilot v1.0

Scope Template Pilot v1.0

Testing Appendices:

The below testing appendices are provided as examples. Auditors should confirm with managing agents how testing is to be undertaken prior to an audit taking place, and whether specific testing appendices are to be used.

Underwriting Testing Pilot v1.01
Claims Testing Pilot v1.0 
  Complaints at Claims Denial Testing 
Claims KPI Testing 


Instruction Template:

Instruction Template v0.3

Contact us

Tom Hamill
Manager, Claims & Delegated Authority Operations