Market Bulletin

Ref: Y5153

Title

Annual Compliance for coverholders – new risk-based and streamlined process

PurposeTo inform the market of Lloyd’s new annual compliance process forcoverholders

Type

Event

From

Paul Brady, Head of Policyholder & Third Party Oversight, Performance
ManagementDate

15 January 2018

Deadline

Related links

www.lloyds.com/the-market/i-am-a/delegated-authority/compliance-andoperations/annual-compliancehttps://www.lloyds.com/the-market/i-am-a/delegated-authority/compliance-andoperations/code-of-practice

From January 2018 Lloyd’s is launching a new risk based annual process for ensuring thatcore compliance information required from coverholders remains up to date. Lloyd’s isintroducing this to improve its ongoing oversight of coverholders and this process is being
introduced following market consultation.
The new process will have wider benefits for managing agents and coverholders as itshould reduce duplicative requests for core compliance information from coverholders andreduce pressure from due diligence requests at the renewal of binding authority contracts.

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Lloyd’s is authorised under the Financial Services and Markets Act 2000

MARKET BULLETINHow the new process will work
As part of its coverholder oversight role, Lloyd’s coverholder compliance team will centrally
collate approved coverholders’ core entity level compliance information. This will include
financial statements, evidence of professional indemnity insurance and certain core
procedure documentation. Lloyd’s will also ensure that this information is updated onATLAS, the coverholder system of record. The information that Lloyd’s will request is set out
in the Code of Practice for Delegated Authorities and also in the Guidance Booklet,
available on lloyds.com.
To obtain this information Lloyd’s will contact coverholders each year, requesting that they
verify that their core compliance information as held on ATLAS remains up to date. This will
be achieved through an annual attestation process. In conjunction with managing agentswriting binding authorities to those coverholders, Lloyd’s will create compliance risk profiles
for each coverholder to ensure that it only asks for relevant compliance information.
Any document or information that has been updated can either be uploaded directly on toATLAS, or if the coverholder prefers, can be sent to Lloyd’s coverholder compliance team
who will be happy to upload the document for them.
If a coverholder or Lloyd’s broker would prefer the attestation process to be managed
through the Lloyd’s broker (rather than direct to the coverholder) please contact
coverholdercompliance@lloyds.com.
Lloyd’s will then check the core compliance information to ensure that the coverholder
continues to meet Lloyd’s criteria for ongoing approval. If a coverholder does not provide
the relevant documentation/information then that may impact the coverholder’s ongoingapproval. Any instances where this is found to be the case will be managed in conjunction
with the coverholder, broker and relevant managing agents before any decisions regarding
ongoing approval are made.
Implications for managing agents and coverholders
All parties who have a relationship with a coverholder will be able, as currently, to accessthe coverholders compliance information on ATLAS. This means that managing agents
do not need to separately request and collect the core information obtained by
Lloyd’s as that information will be available on ATLAS. This should also mean thatcoverholders do not need to respond to duplicative (and possibly inconsistent) requests forcore compliance information.

For larger coverholders, with multiple offices, or for corporate groups with a number ofapproved coverholders, a central compliance record with its own PIN has been created toallow access in one place to all shared core compliance information.

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MARKET BULLETINManaging agents should note that while Lloyd’s will review the core compliancedocumentation provided by coverholders it remains the managing agent’s responsibility toperform its own due diligence assessment appropriate to the level of authority granted tothe coverholder (see the Code of Practice – Delegated Authority (Sept 2017), Part 5). It also
remains the responsibility of managing agents to ensure that they are compliant with anyother regulatory obligations for delegation of underwriting authority and outsourcing andtherefore obtain any additional information they need from the coverholder. In the UK, thisincludes having regard to the relevant FCA / PRA requirements and guidance foroutsourcing, including the provisions at SYSC 3.2, SYSC 8 and SYSC 13.
Further Information
A leaflet and guidance booklet for coverholders with further information for coverholders isavailable on lloyds.com. Lloyd’s brokers (and managing agents where there is no broker)
should ensure this is cascaded to their coverholders.
Full details of Lloyd’s annual compliance process for coverholders can be found onlloyds.com.
If you have any queries about this market bulletin, please contact:
Lloyd’s Coverholder Compliance Team
Telephone: +44 (0)20 7327 6275
Email: coverholdercompliance@lloyds.com

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