LLM1100 - Introduction to Lloyd's: basic concepts and terms: coverholders, Lloyd's brokers and placing risk at Lloyd's

Coverholders

A managing agent may delegate to another company, including to a Lloyd바카라 사이트檚 broker, its authority to enter into contracts of insurance on behalf of a syndicate it manages. The recipient of the authority is known as a 바카라 사이트榗overholder바카라 사이트�. The document setting out the terms of the coverholder바카라 사이트檚 delegated authority is known as a 바카라 사이트榖inding authority바카라 사이트�. Coverholders act as agent of the Lloyd바카라 사이트檚 managing agent (rather than as agent of the policyholder).

Lloyd바카라 사이트檚 brokers

Generally, Lloyd바카라 사이트檚 underwriters do business only in 바카라 사이트榯he Room바카라 사이트� in the Lloyd바카라 사이트檚 building in One Lime Street, and only with accredited Lloyd바카라 사이트檚 brokers. Lloyd바카라 사이트檚 underwriters do not deal direct with policyholders. Brokers who want to place business with a Lloyd바카라 사이트檚 syndicate generally come to the building to do so.

UK brokers must be authorised as a general insurance intermediary by the Financial Services Authority, and foreign brokers must be authorised by their equivalent regulatory authority. In addition, Lloyd바카라 사이트檚 brokers must meet certain accreditation requirements (covering such things as financial standing, management controls, and knowledge of the Lloyd바카라 사이트檚 market) set out in the Lloyd바카라 사이트檚 Brokers Byelaw. A Lloyd바카라 사이트檚 broker is not permitted also to be a managing agent or to be associated with a managing agent.

Coverholder arrangements and binding authorities may be arranged and administered with or without the involvement of a Lloyd바카라 사이트檚 broker. Some managing agencies also run direct sales companies, which do not use brokers.

Placing risk at Lloyd바카라 사이트檚

The following is a brief synopsis of how risk is placed at Lloyd바카라 사이트檚.

  • A customer approaches a Lloyd바카라 사이트檚 broker (either directly or via an intermediary) with the details of a risk to be insured.
  • The Lloyd바카라 사이트檚 broker approaches an underwriter to discuss premium, terms and conditions. If both parties remain interested, a proposal will be made to accept a percentage of the total risk. A number of underwriters may accept portions of one risk (either within Lloyd바카라 사이트檚 or outside).
  • The Lloyd바카라 사이트檚 broker feeds back the proposal to the customer.
  • If the customer wants to proceed, the Lloyd바카라 사이트檚 broker prepares a 바카라 사이트榮lip바카라 사이트� with the details of the insurance, which is signed by each of the underwriters that have agreed to accept part of the risk (바카라 사이트渟ubscription바카라 사이트�).
  • The Lloyd바카라 사이트檚 broker deducts its fee from the premium paid by the customer and pays the net amount to Lloyd바카라 사이트檚 which then allocates it to the syndicates.