Chapter 2

Requirements made under the Intermediaries Byelaw
Section 1

Delegated Authority

Delegation of authority – Part A of the Intermediaries Byelaw
Sub-delegation of authority – paragraphs 2, 4 and 4B of the Intermediaries Byelaw
A1

Except where permitted in the ‘Code of Practice – Delegated Authority’, as amended
from time to time and in accordance with any conditions and requirements set out
there, or where otherwise permitted by the Council –(a)no person to whom authority has been delegated to enter into contracts of
insurance to be underwritten by the members of a syndicate in accordance withparagraph 1 (d) or (e) of the Intermediaries Byelaw, other than a service
company coverholder, shall sub-delegate that authority pursuant to paragraph
2 (b) of the Intermediaries Byelaw.

(b)

no person to whom authority has been delegated to issue documents
evidencing contracts of insurance underwritten by the members of a syndicate
in accordance with paragraph 3 (e) or (f) of the Intermediaries Byelaw, otherthan a service company coverholder, shall sub-delegate that authority pursuant
to paragraph 4 (b) of the Intermediaries Byelaw.

(c)no person to whom authority has been delegated to determine claims oncontracts of insurance underwritten by the members of a syndicate inaccordance with paragraph 4A (e) to (j) of the Intermediaries Byelaw, otherthan a service company coverholder, shall sub-delegate that authority pursuant
to paragraph 4B (b) of the Intermediaries Byelaw.

and references in these Requirements to sub-delegation shall, except where thecontext requires otherwise, apply only to the extent that sub-delegation is notprohibited by this paragraph.

1Registers of coverholders and registered binding authorities – Part Bof the Intermediaries Byelaw

Format and content of the registers - paragraph 6 of the Intermediaries Byelaw
1.

The registers to be established and maintained pursuant to paragraph 5 of theIntermediaries Byelaw shall be held electronically on the system the Council operates
for that purpose.

Inspection of the registers - paragraph 7 of the Intermediaries Byelaw
2.

Any person may inspect the register of –
(a)
(b)
(c)

3.

approved coverholders;approved delegated claims administrators; andthose prescribed classes or categories of persons to whom the Council has
permitted authority to be delegated or sub-delegated in accordance withparagraphs 1 to 4B.

The following persons may inspect the part of the register of prescribed classes or
categories of contracts of delegated authority which relates to that contract ofdelegated authority –
(a)

(b)
(c)

the managing agent of the syndicate that underwrites or is to underwrite thecontracts of insurance in respect of which authority has been delegated or subdelegated in accordance with that contract of delegated authority;a person which is a party to that contract of delegated authority; anda Lloyd’s broker which arranged or broked that contract of delegatedauthority.

Registration of persons required to be registered in accordance with paragraph 5 (c) paragraph 7B of the of the Intermediaries Byelaw
3A.

A person required to be registered in accordance with paragraph 5 (c) of theIntermediaries Bylaw may only be registered by –(a)the managing agent of the syndicate that underwrites or is to underwrite thecontracts of insurance in respect of which authority has been delegated or subdelegated in accordance with that contract of delegated authority;

2

(b)

3B.

such other classes or category of persons as the Council may notify from totime.

Registration of a person required to be registered in accordance with paragraph 5 (c)shall be by means of the electronic system the Council operates for that purpose.

Registration of contracts of delegated authority - paragraph 7F of the of the Intermediaries
Byelaw
3C.

A contract of delegated authority may only be registered by –
(a)

(b)

3D.

the managing agent of the syndicate that underwrites or is to underwrite thecontracts of insurance in respect of which authority has been delegated or subdelegated in accordance with that contract of delegated authority;
such other classes or category of persons as the Council may notify from totime.

Registration of a contract of delegated authority shall be by means of the electronicsystem the Council operates for that purpose.

3

Approved coverholders and approved delegated claims administrators - Part Cof the Intermediaries Byelaw

Applications for approval - paragraphs 8 and 9 of the of the Intermediaries Byelaw
4.

An applicant shall apply to the Council for approval as an approved coverholder orapproved delegated claims administrator by completing the relevant parts of theappropriate form of application which shall be completed and submitted by means of
the electronic system the Council operates for that purpose or by such other means as
the Council may permit.

5.

Any applicant, which is not a Lloyd’s broker, must be sponsored by a Lloyd’s broker
or a managing agent (the “sponsor”). The sponsor shall complete the relevant part of
the appropriate form of application.

Approval – paragraph 13 of the of the Intermediaries Byelaw
6.

In deciding whether an applicant is suitable to be an approved coverholder orapproved delegated claims administrator the Council shall, taking into account theparticular characteristics of the applicant’s business, have regard to the following
criteria and all other relevant matters –(a)whether the applicant is a competent, proficient and capable organisation andin considering that the Council may have regard to the following matters –(i)the applicant’s compliance with appropriate principles of good
corporate governance;(ii)

the applicant’s membership of any body or organisation that theCouncil considers to be necessary or desirable;(iii)

the quality and adequacy of the applicant’s human resources
including –
(i)
(ii)

the competence, reputation, character and suitability of theapplicant’s directors, officers and staff; andthe knowledge and experience of the applicant’s directors,
officers and staff of the conduct and regulation of insurance

4

business in the Lloyd’s insurance market and in any otherrelevant jurisdiction;(iv)

the quality and adequacy of the applicant’s other resources including
the quality and adequacy of the applicant’s –
(i)
(ii)
(iii)

(vi)

(v)

the quality and adequacy of the applicant’s controls and procedures tomanage its business including –
(i)
(ii)

(iii)

(vi)

(b)
(c)
(d)
(e)
(f)

systems, procedures, protocols and arrangements for the
conduct of its business;resources to comply with appropriate service standards for its
customers;
resources to comply with such principles and standards for the
conduct or administration of insurance business in the Lloyd’s
insurance market as the Council may from time to timeprescribe, recognise or endorse; andresources and systems for underwriting administration or, as
applicable, for the determination of claims;

the applicant’s arrangements for identifying, resolving or
managing conflicts of interest;
the applicant’s procedures for its conduct with customers(including procedures to ensure a fair outcome for consumers);
andthe quality and adequacy of the applicant’s controls andprocedures for the management of underwriting risk, for the
management of the determination of claims and for thehandling and recording of complaints;

the nature of the applicant’s business including, in the case of an
applicant to be an approved coverholder, its past, present and forecast
underwriting performance;

whether the applicant is of appropriate reputation and standing;whether any person who controls the applicant or who is connected or
associated with the applicant is of appropriate reputation and standing;whether the applicant has adequate capital and financial resources;
whether the applicant has adequate professional indemnity insurance;
whether the applicant is capable and willing to comply with the terms of any
undertaking given by it to the Council; and

5

(g)

whether the applicant possesses all the licences, approvals or authorisations inorder to act as an approved coverholder or approved delegated claims
administrator wherever it will conduct insurance business in that capacity.

7.

A managing agent that intends to enter into a binding authority or delegated claims
administration agreement with the applicant must, in accordance withparagraph 15 (b) of the Intermediaries Byelaw, complete the declaration or provide
such other confirmation as the Council may require.

[8, 9.

Deleted by the Intermediaries (Restricted Coverholder Revocation) Amendment Byelaw(No.1 of 2014).]

6

Contracts of delegated authority - Part E of the Intermediaries Byelaw

Requirements relating to binding authorities - paragraph 30 of the Intermediaries Byelaw
10.

Every binding authority (other than a registered binding authority that authorises acoverholder to enter into a contract of insurance where the contract is in respect ofmotor business) shall contain the following information, provisions and terms andcomply with the following conditions and requirements –
(a)
(b)
(c)
(d)
(e)

(f)

(g)

(h)

(i)

(j)

(k)

an agreement number by which the binding authority can be identified;the name and address of each approved coverholder which is a party to thebinding authority;
the name and address of each Lloyd’s broker which is a party to the binding
authority or which arranged or broked the binding authority;
the syndicate or syndicates on whose behalf each managing agent isdelegating authority to enter into contracts of insurance (the “syndicates”);
the period of the binding authority which shall be no greater than 36 months
from the date of inception of the binding authority in total, subject to binding
authorities which have periods greater than 18 months must comply with therequirements prescribed for the writing of multi-year binding authorities set
out in Market Bulletin Y4931;
the name of the approved coverholder’s director or partner who is directly
responsible, on behalf of the approved coverholder, for the overall operationand control of the binding authority;
the name of the approved coverholder’s director, partner or employee whowill have principal authority to enter into contracts of insurance under thebinding authority;
the name of the approved coverholder’s director, partner or employee (if any)
who will have principal authority to issue documents evidencing contracts of
insurance under the binding authority;
the name of any person who will have principal authority to determine claims
made on contracts of insurance entered into or to be administered by theapproved coverholder under the binding authority;a precise description of the nature or classification of the contracts of
insurance that the approved coverholder will be authorised to enter into underthe binding authority and any relevant exclusions and limitations;a list of the terms and conditions which must be incorporated in contracts of
insurance entered into under the binding authority including (i)(ii)

relevant wordings, exclusions and limitations;the maximum period of cover;7

(iii)
(iv)

(l)

(m)
(n)
(o)

(p)
(q)

(r)

(s)
(t)
(u)

(v)
(w)

the limits of liability (other than where inclusion of such a limit would
be contrary to any applicable law); andany applicable territorial wordings or general cover conditions asprescribed or endorsed by the Council;

the maximum aggregate premium income limit in respect of all contracts of
insurance that the approved coverholder may enter into under the binding
authority;
the maximum limits of liability in respect of contracts of insurance that theapproved coverholder may enter into under the binding authority;
the territorial limitations on the approved coverholder’s authority under thebinding authority;
provisions requiring the approved coverholder to report in respect of all
premiums, paid claims, outstanding claims and expenses in respect ofcontracts of insurance entered into by class or category by the approved
coverholder under the binding authority;
provisions setting out how and when the payment and settlement of monies
due from each of the parties to the binding authority should be made;provisions for the cancellation and termination of the binding authority
including provisions that enable the binding authority to be terminated upon
the Council giving such direction or order to the managing agent or approved
coverholder;provisions relating to the ongoing obligations of the approved coverholder inthe event that the binding authority expires or is terminated or cancelled forany reason;
provisions setting out the jurisdiction and governing law for the settlement ofdisputes arising from the binding authority;
provisions setting out any business continuity or disaster recovery
arrangements of the approved coverholder;provisions to require the approved coverholder to produce to the Council or to
any relevant regulatory body any information, documents, books, records andother materials which, in the opinion of the Council or the relevant regulatory
body relate or purport to relate to the operation of the binding authority and to
give to the Council or to any relevant regulatory body all reasonable facilities
in its premises for the purpose of examining such materials;
the manner or basis for the calculation of premiums, discounts, commissions,brokerages, fees, charges and expenses; andprovisions setting out if the approved coverholder has authority and, if so, thescope of any such authority to sub-delegate in accordance with a contract ofdelegated authority.

[10A, 11, 12. Deleted by the Intermediaries (Restricted Coverholder Revocation) Amendment Byelaw (No.1 of2014).]

8Requirements relating to line slips and consortium agreements - paragraph 30 of theIntermediaries Byelaw
12A.

Every line slip and consortium agreement shall contain the following information,
provisions and terms and comply with the following conditions and requirements –
(a)
(b)
(c)

(d)

(e)
(f)
(g)
(h)
(i)

(ia)

(j)

(k)
(l)

a reference number or other method of identification by which the line slip or
consortium agreement can be identified;in the case of line slips, the name and address of the Lloyd’s broker
responsible for placing or administering the line slip;
the syndicate or syndicates on whose behalf each managing agent isdelegating authority to enter into contracts of insurance (the “syndicates”) and(if any) the authorised insurance companies that are delegating authority toenter into contracts of insurance;
the managing agent or (if a line slip) authorised insurance company that is
authorised to enter into contracts of insurance under the line slip or consortium
agreement (the “slip leader”);
the period of the line slip or consortium agreement which shall be no greaterthan 18 months from the date of inception;
the maximum aggregate premium income limit in respect of all contracts of
insurance that the slip leader may enter into;
the maximum limits of liability in respect of contracts of insurance that theslip leader may enter into;
the territorial limitations on the slip leader’s authority;
provisions to ensure that each of the parties to the line slip or consortium
agreement receive an appropriate level of information relating to the operationof the line slip or consortium agreement and of each contract of insurance
entered into, including any amendments to thereto;
provisions setting out the authorities given under the line slip or consortium
agreement to agree amendments to any contracts of insurance that may beentered into;
provisions setting out how and when the payment and settlement of monies
due from each of the parties to the line slip or consortium agreement should be
made;provisions for the amendment, cancellation and termination of the line slip or
consortium agreement by the parties;
provisions setting out the jurisdiction and governing law for the settlement ofdisputes arising from the line slip or consortium agreement;

9

(m)

(n)

a precise description of the nature or classification of the contracts of
insurance that the slip leader will be authorised to enter into and any relevant
exclusions and limitations; andthe manner or basis for the calculation of premiums, discounts, commissions,brokerages, fees, charges and expenses.

Requirements relating to delegated claims administration agreements - paragraph 30 of theIntermediaries Byelaw
13.

Every delegated claims administration agreement and every contract of delegatedauthority delegating a managing agent’s authority to an approved coverholder todetermine claims arising under contracts of insurance entered into or being
administered by that approved coverholder in accordance with the terms of a binding
authority shall contain the following information, provisions and terms and comply
with the following conditions and requirements –
(a)
(b)

(c)

an agreement number by which the agreement can be identified;the name and address of each party to the agreement including the syndicate orsyndicates on whose behalf each managing agent is delegating authority todetermine claims arising under contracts of insurance;
the functions, duties and responsibilities of the approved coverholder or theapproved delegated claims administrator that are relevant to its authority todetermine claims. This shall include –
i.

ii.

iii.
iv.

the level of the approved coverholder’s or the approved delegatedclaims administrator’s authority to determine claims (including thecircumstances in which a claim shall be referred to the managing
agent);
details of the approved coverholder’s or the approved delegated claims
administrator’s responsibility to investigate claims and whereappropriate appoint external experts (including the circumstances inwhich the decision to appoint an external expert shall be referred to the
managing agent) and take steps to ensure claims are defended as
appropriate and to seek to make any recoveries;
details of the approved coverholder’s or the approved delegated claims
administrator’s responsibility to assess and review claim estimates;
details of any applicable service levels or standards (including service
standards for dealing with complaints and enquiries) where thoseservice levels or standards shall be consistent with any applicableminimum standards prescribed by the Council from time to time;

10

(d)
(e)

(f)

(g)
(h)

(i)

(j)

(k)

details of the manner by which any insurance monies are to be held,
maintained and properly safeguarded;
provisions requiring the approved coverholder or the approved delegatedclaims administrator or any of its directors or staff to meet any relevant
professional competence standards;
provisions requiring the approved coverholder or the approved delegatedclaims administrator to maintain records and documents in such manner andfor such period as the managing agent may require or as may be required byany applicable legal or regulatory provision;
provisions regarding the maintenance and security of confidential information;
provisions requiring the approved coverholder or the approved delegatedclaims administrator to report to the managing agent in respect of paid claims,
outstanding claims and expenses in such form and at such intervals as the
managing agent may determine (taking into account any minimum standards
the Council may from time to time make);provisions requiring the approved coverholder or the approved delegatedclaims administrator to produce to the managing agent or to any auditor oragent appointed by the managing agent any information, documents, books,
records and other materials which, in the opinion of the managing agent relate
or purport to relate to the operation of the agreement and to co-operate withthe managing agent, auditor or agent;
provisions requiring the approved coverholder or the approved delegatedclaims administrator to produce to any relevant regulatory body any
information, documents, books, records and other materials which in theopinion of the relevant regulatory body relate or purport to relate to theoperation of the agreement;
provisions requiring the approved coverholder or the approved delegatedclaims administrator to notify the managing agent of any –
i.
ii.

(l)
(m)

(n)

complaint or actual, pending or potential litigation;
circumstance or development that may materially impact upon its
ability to perform its functions under the claims agreement effectively
and in compliance with applicable laws and regulations;provisions for the cancellation and termination of the agreement;
provisions relating to the ongoing obligations of the approved coverholder orthe approved delegated claims administrator in the event that the agreement
expires or is terminated or cancelled for any reason;
provisions setting out if the approved coverholder or approved delegatedclaims administrator has authority and, if so, the scope of any such authority
to sub-delegate in accordance with a contract of delegated authority;

11

(o)

(p)

14.

provisions prohibiting the approved coverholder or the approved delegatedclaims administrator from subcontracting or assigning any of its rights,
powers, functions or obligations under the agreement without the prior consent
of the managing agent; andthe jurisdiction and governing law that relates to the operation of theagreement.

The terms of the agreement referred to in paragraph 13 may be set out in one or more
contractual documents.

12Requirements for insurance documentation – Part Fof the Intermediaries Byelaw

Requirements relating to insurance documentation issued under a binding authority paragraph 35 of the Intermediaries Byelaw
15.

Insurance documentation evidencing contracts of insurance issued by an approved
coverholder under a binding authority shall include the following information,
provisions and terms (a)(b)

the name and address of the approved coverholder;
all relevant terms and conditions that relate to the contract of insurance enteredinto by the approved coverholder including:
(i)
(ii)
(iii)
(iv)

(c)

(d)
(e)
(f)
(g)
(h)
(i)

16.

relevant wordings, exclusions and limitations;the maximum period of cover;the limits of liability (other than where inclusion of such a limit would
be contrary to any applicable law); andany applicable excess or deductible,

the amount of the premium and any other information relating to the cost of
the contract of insurance that is required by applicable laws or requirements tobe disclosed;
information about the procedures for handling claims arising under thecontract of insurance and for the resolution of complaints;a unique contract number;provisions that explain the several liability of the members of the syndicate
underwriting the contract of insurance;other information as the policyholder may properly require;the law and jurisdiction applicable to the contract of insurance; andany other provisions required under the laws or requirements of thejurisdiction in which the contract was concluded, where the insured is
domiciled or of any other relevant jurisdiction and any other provisions as
required by the relevant representative or agent of the Society.

An approved coverholder under a binding authority may only issue insurance
documentation evidencing contracts of insurance in which a proportion of the risk is
to be accepted by insurers other than members (a “combined certificate”) provided
that:

13

(a)
(b)

(c)

(d)
(e)

each managing agent that is a party to the binding authority has agreed to theissue of combined certificates;
the combined certificate includes all the details that are required to be included
in insurance documentation evidencing contracts of insurance that are issued
by an approved coverholder under a binding authority;
the proportion or amount of risk accepted by Lloyd’s syndicates is expressly
stated on the combined certificate and is specified separately from the
proportion or amount of risk accepted by other insurers;
the combined certificate contains the following appropriate several liability
statement in accordance with Market Bulletin Y4133; andthe issuance of combined certificates has been confirmed as an acceptable
practice by the general representative in the country in which their issuance isrequired or, in the absence of such a general representative, by the Council,

save that nothing in this paragraph shall permit a combined certificate to be issued incircumstances where that would contravene any relevant territorial general covercondition or would contravene any requirements of the jurisdiction in which theapproved coverholder is domiciled, or any other jurisdiction in which the approved
coverholder trades, provides services or does business.

14[Third party administrators – Part G of theIntermediaries Byelaw
Deleted by the Intermediaries (Delegated Authority) Amendment Byelaw (No. 1 of 2019).]15

Section 2

Brokers

Registration – Part I of the Intermediaries Byelaw(and paragraph 27 of the Underwriting Byelaw)

Paragraph 46 of the Intermediaries Byelaw and Paragraph 27 (i) (i) of the Underwriting Byelaw.
18.

The criteria to be applied in respect of a person established in the United Kingdom arethat it –
(a)
(b)

(c)

(d)
(e)
(f)

is authorised by the Financial Conduct Authority with the permissions
required to undertake the activities of an insurance intermediary;is able and willing to enter into an agreement with each managing agent withwhom it intends to place business recording the general terms and conditions
on which business will be conducted between them;has adequate, suitable and compatible systems, protocols and arrangements forthe conduct of business in the London insurance market which must, from
1 June 2019, include connection to a Recognised Electronic System (asdefined in Lloyd’s Market Bulletin Y5170);
has suitable procedures in place to ensure that insurance monies (money
relating to premiums, return premiums and claims) are properly safeguarded;
has adequate professional indemnity insurance; andcan demonstrate its ability to comply with any other criteria that the Council
may from time to time prescribe,and regard shall be had to any guidance the Council may issue from time to time inrespect of the application of the above criteria as published in ‘Becoming a registered
Lloyd’s Broker – A Guide for Applicants’.
19.

The criteria to be applied in respect of a person not established in the United Kingdom
are that it –(a)either –(i)is registered or approved by a regulator or other statutory body that
requires the intermediary or broker to meet professional requirements
in relation to its competence, good repute and financial capacity
equivalent to those required by the Financial Conduct Authority for
persons authorised as insurance intermediaries in the United Kingdom;
or

16

(ii)

(b)
(c)

can demonstrate that it meets professional requirements in relation toits competence, good repute and financial capacity equivalent to thoserequired by the Financial Conduct Authority for persons authorised as
insurance intermediaries in the United Kingdom;

satisfies the criteria at paragraph 18(b) to (f) above; andcan demonstrate that it is capable and suitable to transact business having
regard to such following criteria and any other relevant matter –
(i)
(ii)
(iii)
(iv)

whether the person possesses appropriate knowledge and ability to
conduct insurance business in the London insurance market;
whether the person and its directors, employees and controllers orpartners in it are of good repute;the adequacy of the capital and financial resources of the person;
whether the person complies with all laws, rules and fiscal
requirements applicable to it as an insurance intermediary wherever it
is established and wherever it conducts or will conduct business.

and regard shall be had to any guidance the Council may issue from time to time inrespect of the application of the above criteria as published in ‘Becoming a registered
Lloyd’s Broker – A Guide for Applicants’.

Requirements made under paragraph 46 of the Intermediaries Byelaw (registration of Lloyd’s
brokers)
20.

In determining whether an applicant should be registered as a Lloyd’s broker theCouncil shall have regard to the criteria at paragraphs 18 to 19 above of theserequirements save that the Council may, where it considers it appropriate, disapply,
amend or add to these criteria as it considers appropriate.

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