Syndicates given scope to write 3-year contracts
Lloyd's has announced that syndicates will be able to write binding authority contracts for up to 36 months from 1 January, 2016.
The company said this in an important step in the London Market Target Operating Model (TOM) delegated authority project.
Until now, binding authorities could not exceed 18 months and, in most cases, they were annual. In order to permit multi-year binding authorities syndicates needed to come up with a process to make sure that, if a binding authority stretched over several years, the business was properly allocated to the current year of account.
Following extensive work and consultation both with stakeholders in the Lloyd's market to resolve challenges around process and with leading counsel to resolve the legal challenges, the new LMA wordings for multi-year binding authority contracts have been completed and made available.
The next few months will now see the London Market TOM delegated authority project delivering some long awaited improvements, including enabling straight through processing, as well as further improvements to both centralised audit provision and coverholder applications.
Shirine Khoury-Haq, director of operations and London Market Group (LMG) and sponsor for the TOM, said: "Our coverholders have told us that the ability to write multi-year binders at Lloyd's will make it easier to do business and we are delighted to have come up with a process that delivers this requirement. This, in addition to co-ordinated coverholder audits, is a significant development in the delegated authorities’ work-stream for TOM.”
Gary Clark, head of programmes at insurance broker Miller, added: "Coverholders have raised concerns that restricting binding authority contracts to 12 months puts the market at a disadvantage to domestic markets around the world where longer contracts are already available. multi-year contracts is an example of the London Market listening to and addressing the concerns of its clients and member firms.”
