Lloyd's Brussels: Placement information for delegated authority business from 01 January 2019
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, risks under a syndicate and Lloyd’s Brussels stamp will have to be placed separately and the MRC will need to have separate sections, or be placed separately for non-EEA/EEA risks accordingly.
This bulletin provides documentation and further guidance to a number of elements of that placement process for delegated authority business.
Lloyd’s Brussels Market Reform Contract (Line slip & Binding Authorities) Guidance
Lloyd’s, in conjunction with the Lloyd’s Market Association (LMA), has produced supplementary addenda to the MRC (Line Slip) Guidance and MRC (Binding Authorities) Guidance, to assist the market with the creation of such sectionalised agreements in respect of risks located in the EEA (underwritten by Lloyd’s Brussels) and non-EEA countries, with effect from 01 January 2019.
The Lloyd’s Brussels Supplementary Addenda do not seek to repeat the content of existing MRC guidance which is already in existence to define the MRC standard, including the layout and content of a standard form, but should be read alongside it. The numbering used, e.g. for paragraph headings, in this document therefore replicates the numbering system within that guidance.
Careful attention should be paid to the language used in each document to identify differences in sections that correspond to business written by Lloyd’s underwriters or by Lloyd’s Brussels, as this is required to ensure that any business written by Lloyd’s Brussels is correctly entered into the relevant systems for processing.
Twin Binding Authority MRC
A Twin Binding Authority MRC template has been created (LMA3113AT), which provides for a single schedule to attach to both an LMA 3113A and to the LBS0001. This allows for one schedule to cover both EEA & Non EEA risks. While the schedule includes split sub-sections where necessary, stakeholders should insert additional splits where necessary.
Further guidance on the use of the Twin schedule is provided in the MRC Guidance (Binding Authority) Brussels Supplementary Addendum. All of the requirements laid out in both the LBS0001 & LMA3113A, and the guidance documents thereto, will still apply.
Use of LMA Binding Authority Endorsements on Lloyd’s Brussels Coverholder Appointment Agreements
In order to allow for existing LMA endorsements to be used, an Interpretation clause has been drafted to align the language used to refer to the parties in the Coverholder Appointment Agreement. This has been published as LBS0060. This clause should be attached to all Coverholder Appointment Agreements with LMA clauses attaching to it. This clause is not to be used to attach to the Twin Binding Authority MRC as the interpretation clause is already contained therein.
Requirements at 01 January 2019
Further to previous correspondence from both Lloyd’s and the LMA, stakeholders are reminded that coverholders are not permitted to bind EEA business on behalf of Lloyd’s underwriters without specific dispensation from Lloyd’s beyond 31 December 2018. To this end, endorsement LMA5323 (Brexit Binding Authority Sunset Endorsement) was published earlier in the year, through LMA bulletin LMA18-022-TH.
A correction to the clause has been issued due to an error in the time zone used. This has been issued as endorsement LMA5323A, which is attached to this bulletin and can be found on the Lloyd’s Wordings Repository.
Lloyd’s has also issued guidance on renewal of line slips, which we will re-state here. It is not possible to add a Lloyd’s Brussels section to already existing line slips. Therefore, a new line slip must be placed for any EEA business to attach to after the 31 December 2018.
Any queries regarding this bulletin and the documentation herein should be addressed to Tom Hamill: firstname.lastname@example.org
or 020 7327 8377.
General Brexit queries or any technical queries on licencing or Lloyd’s requirements should be addressed to Brexit@lloyds.com
Manager, Claims & Delegated Authority Operations