Brexit – placing of EEA/non-EEA risks post 01 January 2019
Interlocking language for split/sectionalised MRC
Lloyd’s has established a new insurance company based in Brussels (Lloyd’s Insurance Company S.A., known as Lloyd’s Brussels), to underwrite non-life insurance and facultative reinsurance risks located in EEA countries with effect from 01 January 2019. From that date, placements under a syndicate and LBS stamp will have to be priced separately and the MRC will need to be split, or have separate sections, for non-EEA/EEA risks accordingly.
To assist the market with the ‘interlocking’ of policy limits and aggregate deductibles across the split/sectionalised MRCs required for EEA/non-EEA business after 01 January 2019,the LMA has produced model language in the form of model clauses, as follows:
LMA5333 Shared Limits Endorsement
- LMA5334 Shared Aggregate Deductible Endorsement
Brexit affected policies
In addition to the ‘interlocking’ language, the LMA has also produced model language to endorse onto ‘Brexit-affected’ policies, where the cover provided may be defined in terms of reference to EU Law and/or Regulation; and/or in terms of reference to Europe/EU within the Territorial scope; and to clarify the position where any automatic coverages provided by the terms and conditions of the policy for entities acquired or established by the Insured should not apply, to the extent that, post Brexit, the Insurer is not permitted by applicable law or regulation to provide such coverage:
- LMA5335 EU Law and Regulation Clarification Clause (on or after Brexit)
- LMA5336 EU Territory Clarification Clause (on or after Brexit)
- LMA5337 EU Automatic Coverage (Acquisitions/Additions/Additional Insureds) Clarification Clause (on or after Brexit)
Syndicates outwards reinsurance treaty exclusions
Whilst there is no standard language, as treaties all tend to be bespoke to the various D&F accounts they are protecting, it is common for syndicates outwards reinsurances to contain a general exclusion of treaty business. To assist the market, the LMA has produced model language for use on syndicates’ outwards reinsurances, to amend the 'treaty exclusion' to clarify the treatment of the reinsurance of Lloyd’s Brussels Business (i.e. underwritten on behalf of Lloyd's Brussels, on or after 01 January 2019, and simultaneously reinsured back to the syndicate in line with the terms of the Outsourcing Agreement) which is ceded by the syndicate:
LMA5338 Treaty Reinsurance Exclusion Amendment (Lloyd’s Brussels Business)
These clauses are purely illustrative and established and distributed for the guidance of Members, who are free to agree to different conditions.
All LMA wordings are now available to access on the Lloyd’s Wordings Repository.
If you have any queries arising from these documents, please do not hesitate to contact Alison Colver (email@example.com, 020 7327 8370).
Head of Wordings