Lloyd's Market Association Bulletin

LMA19-033-AC  19 November 2019

Change of Lloyd's suggested/default service of suit agent in USA

Following the publication of Lloyd's Bulletin Y5262, dated 30 September 2019, advising of a change to the Lloyd's suggested/default service of suit agent in USA (from Mendes & Mount to Lloyd’s America, Inc.), the LMA has received a number of enquiries regarding LMA model service of suit clauses for use in USA. 

Specifically, we have been asked whether the LMA intends to update/republish model clauses NMA1998/LMA5020 and CL355 to enable policies to be endorsed to reflect the change in Lloyd’s service of suit agent, for policies renewing on/after 01 January 2020. We have also been asked to obtain clarification from Lloyd’s as to when changes to policy wordings must be made. 

Live policies

As indicated in Lloyd's Bulletin Y5262, managing agents wishing to avail themselves of the centralised service of suit handling arrangement provided by Lloyd’s America for Lloyd’s policies, must update the wording specifying the agent for service of suit for US policies as Lloyd’s America. Whilst this change may be implemented immediately on all policies, Lloyd’s have confirmed that managing agents do not have to endorse all live risks. Policies should, however, be amended on renewal to replace Mendes & Mount with Lloyd’s America, Inc. For coverholder business, the change can be implemented for policies written under the binding authority on renewal of the binding authority agreement. 

Lloyd’s has transitional arrangements in place with Mendes & Mount to ensure suits served upon them will continue to be passed through to Lloyd’s America, so no further action is required until the first renewal of the open market risk/binding authority agreement falling on/after 01 January 2020. New Lloyd’s policies issued/binding authorities placed on/after 01 January 2020 must, however, refer to Lloyd’s America (unless separate contractual arrangements have been made with Mendes & Mount or another service agent). 

Mixed market placements 

Managing agents are reminded that, as with the expiring arrangement with Mendes & Mount, the new service of suit arrangement in place with Lloyd’s America is for Lloyd’s underwriters. 

Where the subscription market is 100% Lloyd’s, the service of suit nominee will therefore need to change from Mendes & Mount to Lloyd’s America (unless the managing agents concerned have made separate contractual arrangements elsewhere). 

Where subscriptions are mixed placements, there will need to be two service of suit agents noted, one for the Lloyd’s participants, specifying Lloyd’s America, and one for the company markets (unless the managing agents concerned have confirmed they have separate contractual arrangements elsewhere, which are in line with the company market details). 

LMA Clauses 

As both NMA1998 and LMA5020 are generic service of suit clauses, they do not name a specific service of suit agent/nominee. They both contain a 'blank' for completion, as appropriate to the risk in question, and therefore do not need to be reissued. CL355, on the other hand, specifically names Mendes & Mount, and therefore needs to be addressed. 

The LMA has therefore published two new/additional model clauses: 

CL355A – Institute Service of Suit Clause (U.S.A.) - naming Lloyd’s America Inc. as the Lloyd’s service of suit agent  
CL355B – Institute Service of Suit Clause (U.S.A.) - containing a 'blank' for completion as appropriate for the risk in question  

Both of these new clauses are now available on the Lloyd’s Wordings Repository. Model clauses are purely illustrative and are distributed for the guidance of our Members, who are free to agree to different conditions or amend as they see fit. Clarification CL355 will not be archived at the current time, as it may still be used, as published, in cases where managing agents have chosen to continue with using Mendes & Mount as their agent for service of suit. As indicated in Market Bulletin Y5262, managing agents are reminded that they must separately contract with Mendes & Mount for this service. If managing agents have not contracted separately with Mendes & Mount, then CL355 must not be used. Any queries on the above may be addressed to Alison Colver.

Alison Colver
Head of Contract Wordings