Lloyd's: Law and Practice

capital requirements: capital resources requirement 250–1; European Union , ; Individual Capital Adequacy Standards (ICAS) 251–2; Lloyd’s market ; Solvency II ; UK insurers

Capital Structure Working Party , 106

Central Accounting 6, 139, 184, 220, 229, ; premiums trust fund 260

Central Fund , ; New Central Fund 11,

Central Settlement see Central Accounting

Centrewrite Limited 40, 46, 52, 54; deceased members 87; cessation of membership 86; reinsurance to close by 103

China

claims: 1992 and prior business 219; Claims Management Principles and Minimum Standards 227;delegation of claims handling ; electronic reporting 229; electronic settlement 229; ICOBS 228; leading underwriter clauses 226; Lloyd’s agents 226; see also Claims Schemes

Claims Schemes 6, 211; 1991 Claims Scheme 219; 1994 Claims Scheme 220; 2006 Claims Scheme ; 2010 Claims Scheme

codes of practice: Code of Practice-Delegated Underwriting ; Code for Underwriting Agents: Syndicate Expenses 135, 139; Contract Certainty Code of Practice 184, 195n74; Members’ Agents Code of Practice 166; Service Companies Code of Practice 203

Committee of Lloyd’s 6, 20, , 26; financial guarantee 243; powers and duties 28, 30, 42, 68; supervision of underwriters 233; Underwriting Agents’ Manual 125

conversion arrangements 88

Conversion Rules 88

corporate members , 37, 39, 125, 262; 1993 Business Plan , 125; accounts and reporting 284; anti-concentration rules 99; capacity offers ; capacity transfers ; capital structure ; conversion arrangements 88; corporate capital 48; Council of Lloyd’s 65; direct corporate participants 127; Enforcement Committees 311, 315; Funds at Lloyd’s ; general meetings 71; individual accounts 289; Limited Liability Partnerships 303; members agents 163; membership , ; membership agreements ; Members’ Compensation Schemes 325n24; New Central Fund , 347; obligations ; premiums trust deeds , 267, 268; profits taxes ; Reconstruction & Renewal 53; reinsurance to close 103; reorganisation orders 348; resignation 85; Scottish Limited Partnerships 303; standard managing agents’ agreements , 491–528; substitute agents ; syndicate membership ; syndicate profits 294; syndicate tax computations ; taxable profits ; taxation of members 302; underwriting 82–3; United States 265

Corporation (of Lloyd’s) 1, 26, 63, 70; corporate capacity ; FSMA 8, 94; Lloyd’s Act 1871 20

Council of Lloyd’s 1, , , 74; 2010 Claims Scheme 225; aggregate accounts 284, 288; Lloyd’s Act 1982 6, 171; premiums trust deeds ; substitute agents 356; transfer of business 306; covenant and charge 84; funds at Lloyd’s 10, 11n66,

coverholders 4, ; approved coverholders 4, 199, ; approval of ; binding authorities 99n12, 138, 146, 169n1, , 205; fiduciary duties ; placing brokers 172–3; restricted coverholders 4, 158, 199, 202, 205; restrictions on business 158; see also approved coverholders; binding authorities; restricted coverholders

Cromer Report ; rejecting members’ limited liability 98; underwriting standards 98, 233

declaration of compliance 83, 273

de-emption , 147; members’ agents’ agreements 129; standard managing agent’s agreement 134

delegated underwriting ; accounting ; approval of coverholders ; approved coverholders ; binding authorities , ; cancellation of authority 209; claims handling ; code of practice ; consortia ; duty of care ; fiduciary duties of coverholders ; FSMA 218; lineslips , ; Lloyd’s requirements ; minimum standards ; payments ; registration of binding authorities 205; registration of restricted coverholders 205; restricted coverholders ; Solvency II 218; syndicate service companies ; termination of authority 209

direct corporate participants (DCP) 77, 82, 109; agency agreement terminations 117; obligations 143; see also corporate members

disciplinary committees see Enforcement Committee

dispute resolution: arbitration scheme ; member-underwriting agent disputes ; members’ compensation scheme ; member-Lloyds 327; members’ ombudsman scheme 327; policyholder disputes ; syndicate ICA 328; underwriting agent-Lloyd’s 328

electronic placing

enforcement ; appeal from Council decisions 320; Appeal Tribunal ; Enforcement Board 312; Enforcement Byelaw ; Enforcement Tribunal 313; grounds for action ; inquiries ; intervention orders ; Lloyd’s Council ; proceedings ; sanctions ; skilled person reports 310; see also Enforcement Committee

7, ; enforcement proceedings 314; imposing sanctions , 319; members’ ombudsman scheme 327; rights of appeal 316

Equitas 6, 12, 141, 275, 305, ; Australia 337; claims processes 219; deceased members 87; New Central Fund ; premiums trust deeds 256; reinsurance ; reinsurance to close (RITC) , 160; run-off 245; United States 266, 306

external member of the Society

external member of the Council 65

external regulation

Financial Conduct Authority (FCA) 89, 91, 95; aggregate accounts 288; byelaws 67; cooperation arrangements 7, 308; delegated underwriting 218; Enforcement Byelaw 308; FCA Principles for Business 165; insurance mediation activities 171; managing agents 154, 165; premiums trust deeds 259; see also Prudential Regulation Authority (PRA)

financial guarantee business ,

Financial Services and Markets Act 2000 (FSMA): authorised persons 91; regulated activities 92; regulation of Lloyd’s market ; supervision of Lloyd’s market ; see also basic market activity; managing agents; members’ agents; regulated activities; secondary market activity

Fisher Report , 50, 170, 233, 275

following year underwriting

Franchise Board 2, 6, , 66, 68, ; 2006 Claims Scheme 221; agency agreement terminations 117; approved coverholders ; binding authorities , 210; business planning ; claims handling 211, 225; delegated underwriting 200; directions to underwriting agents 159; managing agents 136, , , 164; managing syndicates 102; Market Supervision and Review Committee 310; members’ agents’ agreements 131; Minimum Standards for Delegated Standards 216; new syndicates 106; performance management 235; placing brokers 173; register of binding authorities 205; resolving disputes 328; restrictions on business ; reviews 159; run-off ; substitute agents 160, 264; syndicate premium incomes 241; underwriting guidelines 237

Franchise guidelines 59, 234, 240

Franchise Principles 58, 234

Funds at Lloyd’s (FAL) 10, 83, ; personal reserve sub-fund 273; special reserve fund 274; trust deeds

funds in syndicate 257n10, 262, 270; corporation tax 296

General Meetings of members of the Society 53, 65n7, 67, 71

General Undertaking 28, 69, , 81, 354

General Underwriters Agreement (GUA) 193,

globals 283

incidental syndicates 97, 148

Individual Capital Adequacy Standards (ICAS) 248, 251–2; New Central Fund 277; Solvency II 253

individual members see Names

insolvency procedures

insurance business transfers 54, 85,

insurance market direction 9n58, 93,

integrated Lloyd’s vehicle (ILV) 50, 57, 99

interavailable funds at Lloyd’s/deposit 49; funds at Lloyd’s 271

intervention order 307,

Japan

joint certificates

leaders/leading underwriters: appointment 192; authority 194; disclosure by the broker ; duties of care ; general underwriters agreement ; leading underwriter agreement 192; placing processes ; representations by the broker ; slips 193

life business 173, 244, 305, 332; Australia 336; premiums trust funds ; Singapore 337; United States 332; see also long term business

limited liability partnership (LLP) 75, 78, 303; agents’ disputes 323; enforcement 310; members’ agents 2; profits taxes 291; sanctions 315; underwriting members 1

lineslips 109, 158, , 195, , , 286; see also binding authorities

Lioncover Insurance Company Limited 34, 52, 54, 103

Lloyd’s: byelaws ; constitutional requirements 71; corporate capacity ; Council of Lloyd’s ; definition 1, 63; governance ; Lloyd’s Acts 63; regulatory powers ; see also Lloyd’s agents; Lloyd’s brokers; Lloyd’s deposits; Lloyd’s market; Lloyd’s policies; Names; members; Society of Lloyd’s

Lloyd’s agents 17, 64, 345; claims 221, 226, 346; insurance certificates 200, ; salvage arbitrations 345

Lloyd’s American Instruments (LAI) 212, 260, 265

Lloyd’s American Trust Deeds (LATD) 265

Lloyd’s American Trust Funds (LATF)

Lloyd’s Asian Instruments 268

Lloyd’s brokers , ; 2006 Claims Scheme 221; 2010 Claims Scheme ; accounting ; approved coverholders 202, ; binding authorities 205, 206, 212, ; broker markets 4; claims abroad 346; claims processes ; disclosure and representation ; dual capacity ; electronic claims reporting 229; electronic placing ; enforcement , 311n36, 318; errors and omissions insurance 182; insurance certificates 345; litigation 351; misconduct 315, ; open market correspondents ; payments to brokers 180–2; placing brokers 172–3; registration of brokers ; responsibilities 177, ; Singapore ; statutory monopoly 169, 172; terms of business agreements ; United States 265; The Zephyr

212, 265

Lloyd’s Canadian Trust Fund (LCTF)

Lloyd’s deposits 64, 84, 233, 263; conversion arrangements 88; funds at Lloyd’s trust deeds ; members’ agents 129; overall premium limits 82; taxable profits 299

Lloyd’s Dollar Trust Fund (LDTF) 267

Lloyd’s market: annual audits ; business plan ; capital structure ; constitution ; corporate capital 48; Cromer Report ; financial assistance for Names ; financial guarantee business ; Fisher Report ; Franchise Model 57–61; guarantees and deposits 19; incorporation ; Lloyd’s Act 1911 21; Lloyd’s Act 1982 ; Lloyd’s Acts 63; LMX ; Neill Report ; non-marine business ; origins ; post-R&R strategy ; premiums trust funds ; Reconstruction & Renewal ; task force ; trust deeds ; Walker Report ; World War I 24; World War II ; see also Lloyd’s; Names

Lloyd’s Market Association (LMA) 60, 176, 185n12; managing agents

Lloyd’s market reorganisation order: insolvency procedures 348

Lloyd’s policies: deceased members 87; Financial Services Compensation Scheme 278; Lloyd’s Policy Signing Office 5, , 184, 191

LMP slip 185, 193

London market excess of loss business (LMX) 37, 352; Business Plan ; Franchise Guidelines 241; members’ agents’ agreements 129; Walker Report , 233

long tail business 352; run-off contracts , 353

long term business 243, 244, 244n78, 250, 253; funds at Lloyd’s ; overall premium limits 82; premiums trust deeds 259; premiums trust funds ; solvency test 281; Special Trust Directions 265; United States 266

managing agents 123, ; application of FSMA ; conditions 159; decision processes ; directions 159; duties , ; financial resources ; ICOBS 228; Lloyd’s Market Association ; permission of the Franchise Board 151; powers and duties ; remuneration 141; requirements on 155, 159; restrictions on business ; reviews 159; substitute agents 160; withdrawal of permission 152

managing agents’ agreements: admission to membership 77; conversion arrangements 88; premiums trust funds 10; standard managing agents’ agreement , 455–527; syndicates 2, 3, 10

managing agent’s trustees 10, 101, 131, 152; funds at Lloyd’s trust deeds ; Lloyd’s Dollar Trust Funds 267; premiums trust deeds 260, 261n43, 262, 264

mandatory offers

market reform contract (MRC) 5, , 193

members ; admission ; categories and classes ; conversion arrangements 88; deceased members ; financial requirements 9; fees ; funds ; members’ agents ; members’ agent’s agreement , 416–41; members’ compensation scheme ; membership agreement , 397–411; membership requirements 82–3; resignation of membership ; reviews of members’ affairs 84; subscriptions ; termination of membership ; underwriting requirements 82–3

members’ agent pooling arrangement (MAPA) 39, 106, 110, 127, 302

members’ agents ; application of FSMA 165; codes of practice ; financial requirements 165; permission by Lloyd’s ; underwriting agents ; see also members’ agents’ agreements

members’ agent’s agreement , 416–41

members’ compensation scheme

Membership Agreement , 397–411

Minimum Standards ; claims handling 225, 227; Franchise Board 156; managing agents’ duties 135, 152; performance framework ; see also codes of practice

minority buy-outs 60, ; syndicate mergers 118

mirror syndicates see incidental syndicates

multiple syndicates , 120, 201; shared reinsurance 242

multi-year contracts 105

Names: cash calls 37, 351, ; conversion arrangements 88; deceased members 87; dispute resolution 322; Fisher report 29n79, ; indirect Names 215, 353; litigation , , 351; London Market excess of loss 352; managing agents’ duties , ; members of Lloyd’s 1; Members’ Agent Pooling Arrangements 106; members’ agents , 354; members’ agents’ agreements ; members’ compensation scheme 325; mutualisation of liability 38; Neill Report , 37; premiums trust deeds 256, 355; Reconstruction & Renewal ; reinsurance 45, ; relationship with underwriting agency companies ; rights 38, 39; standard agency agreements , ; task force ; Walker Report ; see also individual member, member

Namecos 75

Neill Report ; brokers 170; disputes 322; members’ compensation scheme 325; new syndicates 109; standard agency agreements 125, 136

New Central Fund , 249, 275, ; corporate membership 81; drawdowns 140, 142; fees and subscriptions ; insolvency procedures 347; members’ compensation scheme 326

nominated members of the Council 34, 36, 42,

non-Lloyd’s brokers 136,

non-underwriting members 19,

169, , 183; accounting 231; Brazil 342; China 342; claims 231; competition law ; contract certainty ; disclosures by brokers, ; electronic placing ; followers ; general underwriters’ agreements ; leaders (duty of care) ; leaders ; market practice ; market reform contracts ; premiums 231; relationship between policy and slip ; representations by broker ; Singapore ; The Zephyr

open market correspondents

overall allocated capacity 82

overall premium limit (OPL) , 85; funds at Lloyds requirements ; members’ agents’ agreements 128–9; special reserve funds 274

overseas business 11; Australia ; authorisation in the EEA ; authorisation outside the EEA 330; Brazil ; Canada ; China ; Credit for reinsurance (US) 333; Japan ; Lloyd’s scheme regulations ; Singapore 337-9; surplus lines business (US) ; trust funds for US licensed business 334; United States

Overseas Business Regulatory Deposits 9, 11, 101, 255, 259, 261, 263, 268

overwriting 241

parallel syndicates 104, 110, 138, 146; minority buy-outs 120

payment of premiums and claims

personal reserve sub-fund (PRF) 130, 256, 261, 273; Canada 268; release to on RITC 145

policies see Lloyd’s policies

portfolio selection 129, 130, 163, ,

pre-emption

premiums trust deeds (PTD) 7, 47, 256; commentary ; delegated underwriting 212; members’ agents 164

premiums trust funds (PTF) 9, ; assets ; litigation ; managing agents 134, , ; members’ agents 164; permitted trust outgoings 258; structure

Principles of Relationship 155, 235

PRA-regulated activities

Prudential Regulation Authority (PRA) 2, 89; see also PRA-regulated activities

quasi-corporate members 1
quasi-individual members: arbitration schemes 323; members’ compensation scheme 325; ombudsman scheme 327

recognised accountant 139; appointment 102, 158; audits 287

Reconstruction & Renewal (R&R) ; litigation ; New Central Fund 275; standard agency agreements 125

regulated activities , 248; authorisation under FSMA ; EU Insurance Directives ; external regulation , 90; management of syndicates 102, ; managing agents 154; members’ agents 163, 165; supervision ; underwriting agents 163

Regulating Trustees 10, 145, 257, , 268, 273

reinsurance to close (RITC) 40, 52, 54 ; agency liability 353; deceased members 87; insurance business transfers ; run-off ; standard agency agreements ; standard managing agents’ agreements 134, 138; supervision of underwriting 242; syndicates , 118; trust outgoings 259

related party transactions: disclosure 137, 236, 242; managing agents’ duties 137; syndicate accounts

reorganisation controller: insolvency proceedings

restricted binding authorities 158, 172, 200, 210; insurance contracts 210; see also binding authorities; restricted coverholders

restricted coverholders 4, 199, , 205, 207

risk management principles 239

run-off companies 92n26, , 211, 246, 315; enforcement ; restrictions on business 159

run-off managers 102, 152, 157, 159, 285

Scottish limited partnerships (SLP) 1, 75, 78, 303; members’ agents 2n12; members’ compensation scheme 324n24; profits taxes 291

secondary market activity: FSMA , 94; PRA-regulated activities 93

service companies 136, 172–3, 207, 208; approved coverholders 202; Canada 335; electronic claims reporting 229; Japan 340; restrictions on business 158; Singapore

several liability 2, 3, 75, , ; Australia 336; Canada 335

several liability clause , 243

Singapore 337

slips 3n21, , 100, 183, 318; 2010 claims scheme ; binding authorities 207; brokers’ duties 178; electronic claims reporting 229; leaders , ; MRC Guidelines ; open market business ; policy and

Society (of Lloyd’s) 2, 63; byelaws 66; capacity offers ; capacity transfer 113; Central Fund 276, 277; Council of Lloyd’s ; delegated underwriting by 200; dispute resolution , 326, 327; enforcement committees 311; Financial Services and Markets Act 2000 93, 94, 322; fundamental rules of the Society 28, 29, 98; general meetings 71; incorporation ; intervention orders 319; litigation 351; Lloyd’s Act 1911 64; members ; members’ compensation scheme 326; ombudsman scheme 327; sanctions for misconduct 315; Solvency II ; solvency test 281; substitute agents 160; working members 30, 73; see also Lloyd’s

SOLPRU 91, 218, , 247,

solvency test

90–1, 218; capital requirements , ; delegated underwriting 218; regulation of members ; see also SOLPRU

special purpose syndicate (SPS) 61, 108, 241

special reserve fund (SRF) 11, 84, 129, 249, 274, 295; syndicate tax computations 295; taxable profits 300,

Special Trust Directions 137, , 265, 268; Lloyd’s American Instruments 265; Lloyd’s American Trust Deed 265; Lloyd’s Asia (Offshore Policies) Instrument 2002 265; Lloyd’s Asia (Singapore Policies) Instrument 2002 265; Lloyd’s Canadian Trust Deed 265; members’ obligations 142; premium trust deeds , 263; premiums trust funds , 257, 260; reinsurance to close 145

Special Trust Funds: Lloyd’s American Trust Funds ; Lloyd’s Asia (Offshore Policies) Instrument 2002 265, 268; Lloyd’s Asia (Singapore Policies) Instrument 2002 265, 268; Lloyd’s Asia Scheme Regulations ; Lloyd’s Canadian Trust Fund ; Lloyd’s Dollar Trust Funds 267; see also Special Trust Directions

standard agency agreements , 446–455; standard members’ agents’ agreements ; standard agents’ agreement ; standard managing agent’s agreement ;

standard managing agent’s agreement 455–527; allocation of risks 138; arbitration 150; capacity transfers 147; cash calls 140, , 150; claims 138; commencement ; duty of care ; fiduciary duties ; following year underwriting ; generally ; governing law 150; jurisdiction 150; managing agents’ powers ; members’ obligations ; New Central Fund drawdowns 140; nomination of successors 147; notices 150; reinsurance to close 138, 145; remuneration of managing agents ; settlement 138; substitute agents ; successors 147; syndicate expenses ; syndicate members ; taking over provisions ; termination ; variation of agreement

subscription business , , claims

substitute agents: managing agents , 160; members’ agent , standard managing agent’s agreement

surplus lines business (USA) ; Lloyd’s American Trust Funds 266

surrender arrangements 83n77; capacity offers 115; capacity transfers 113; mandatory offers 116

swap arrangements see surrender arrangements

syndicate allocated capacity 11, 38, , , 157; mandatory offers ; minority buy-outs ; pre-emption and de-emption 111; syndicate meetings 122

Syndicate and Arbitration Agreement 100, 133

syndicate annual accounts 39, ; aggregate accounts 288; audit 287; disclosure 137; managing agents’ duties 137; publication and distribution 287

syndicate auditors 54, 134; appointment 287; claims against 351, 356; liability 353; removal 287; taking over provisions 148

syndicate cessation

syndicate ICA 95, 102, 235, 238, 249; disputes 328; individual capital adequacy standards 249, 251–2

syndicate list 77, 126, 148; agency appointment 146; members’ agents’ agreements 128–9, 131, ; remuneration of the managing agent 141

syndicate meetings 122

syndicate mergers

syndicates 1, , ; agency agreement commencements ; agency agreement terminations , ; arbitration 150; auctions ; authority ; bilateral arrangements 114; capacity offers ; capacity transfer , 147; changes in participation ; de-emption 112; following year underwriting ; governing law 150; insurers’ liability 100; jurisdiction 150; legal proceedings 101; major syndicate transactions 118; management ; managing agents’ powers ; mandatory offers ; meetings 122; members’ agents’ agreements ; members’ obligations ; membership of syndicates ; minority buy-outs ; multi-year contracts 105; Names obligations ; new syndicates ; non-marine business 21; notices 150; obligations ; participation nominations 147; pre-emption 111; principles of participation ; reinsurance to close , 145; reinsurers’ liability ; relationship between members , 123, ; remuneration of management agent ; several liability ; standard agency agreements ; standard agents’ agreements ; standard managing agents’ agreements ; substitute agents ; surrender arrangements 115; syndicate cessations 121; syndicate mergers ; taking over provisions ; variation of agreements

taking over provisions 123, , 150

Task Force

taxation of members: companies 296; individuals 299; insurance premium tax 304; Limited Liability Partnerships 303; profits taxes ; Scottish Limited Partnerships 303; syndicate profits ; syndicate tax computations 295; value added tax

Terms of Business Agreement (TOBA) (Lloyd’s broker-client) 178

Terms of Business Agreement (TOBA) (managing agent-broker) 4, 172,

transfer agreements 88

transition arrangements 88; capacity transfer 113

turnkey syndicates 107, 138

170, 170n12

underwriting: financial guarantees ; Franchise Guidelines ; life syndicates 244; overwriting 241; performance framework of minimum standards ; performance management , 240; reinsurance to close 242; related party transactions 242; risk management ; run-off ; shared reinsurance 242; supervision ; syndicate business planning ; syndicate monitoring ; war risks 243; see also underwriting agents

underwriting agents: permission by Lloyd’s ; see also active underwriters; delegated underwriting

underwriting guidelines 235; Code of Practice ; Franchise Board 237; minimum standards 216

underwriting management principles 216,

underwriting members , , 111, 306, 340; capacity transfer 112; delegated underwriting 200; litigation 351; members’ agents’ agreements 128; members’ compensation scheme 326; pre-emption 111; reinsurance to close 103; taking over provisions 149; see also active underwriters; delegated underwriting

Underwriting Requirements: admission to membership ; appeals tribunals 317, 320; approval of coverholders 203; conduct of inquiries 310; costs 314; delegated underwriting ; dispute resolution 328; enforcement ; inquiries 310; intervention orders 319; managing agents , 155, 157, 159; minimum standards ; misconduct 314; run-off 246; sanctions 314; see also underwriting; underwriting members

underwriting year accounts ; publication and distribution 287

United States ; binding authorities ; corporate membership 265; Equitas 266, 306; life business 332; Lloyd’s American Instruments (LAI) 212, 260, 265; Lloyd’s American Trust Deeds (LATD) 265; Lloyd’s American Trust Funds (LATF) ; Lloyd’s brokers 265; long-term business 266; overseas business

Value Group 48, 49; 1994 Value Group report 106, 150

war risks 24, 26, 208,

working member of the Council 74

working member of the Society 73, 74, 311

The rest of this document is only available to i-law.com online subscribers.

If you are already a subscriber, click Log In button.