market bulletin

Ref: Y5019

Title

International Complaints Handling: USAPurpose

To advise that the USA is being brought in-scope for Lloyd’s international
complaints handling arrangements.

TypeEvent

FromPaul Brady
Head of Market Conduct

Date

8 September 2016

Deadline

From 1 January 2017 on renewal of the binding authority or placement

Related links

www.lloyds.com/complaintshandling

In January, Lloyd’s notified details of its updated arrangements for international complaints
handling - see Market Bulletin Y4961. As noted in that bulletin, the implementation of thenew arrangements to further territories will be notified to the market from time to time.
Managing agents are accordingly asked to note that the USA is now being brought in-scopefor Lloyd’s arrangements for complaints handling. Managing agents, however, are asked tonote that the process being adopted for the USA is different in some respects to the process
implemented to date for countries in the EU. Details of the process to be followed in theUSA are set out in Appendix 1.
Timetable for implementation
The new arrangements are being implemented commencing from 1 January 2017 on therenewal of each binding authority or placement.
All binding authorities and open market placements (including line slip programmes andmaster or group polices) renewing on 1 January 2017 are therefore required to adopt thenew arrangements. All other binding authorities or other placements renewing after
1 January 2017 must adopt the new arrangements on renewal and no later than by 31
December 2017.

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

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Coverholders and TPAs
To support the implementation of the changes with coverholders and TPAs in the USA,
Lloyd’s has produced the following additional documents, available to download atwww.lloyds.com/complaintshandling:A guidance note and FAQs prepared for coverholders and TPAs.

Model complaints handling clauses for endorsing to binding authority agreements
writing USA business – LMA5268 (for coverholders without complaints handlingauthority) and LMA5269 (for coverholders with complaints handling authority).

In addition, a letter from the Head of the Delegated Authorities Team has been produced
which Lloyd’s brokers will be asked to send to all USA coverholders explaining the changes.
Lloyd’s believes it is important that coverholders in particular are given consistent
instructions by all managing agents to ensure the successful implementation of the newarrangements. Variations of approach between managing agents, while understandable,
can increase the cost and resource required for coverholders to make any necessarychanges. This is particularly the case for coverholders who have binding authorities withmore than one managing agent.
Accordingly, managing agents must use LMA5268 or LMA5269 for binding authorities
writing USA business. Any changes (other than as allowed for in the model wordings) must
be agreed with Lloyd’s Delegated Authority Team.
Managing agents are also asked to use the guidance note prepared for coverholders andTPAs as the basis for any briefing of coverholders/TPAs.
Further information
Lloyd’s is presently arranging a Town Hall meeting where there will be a short presentationon the new arrangements and an opportunity to discuss them with members of theComplaints Team. Further details will be provided shortly.
Any questions regarding the arrangements for complaints handling at Lloyd’s can be sent tothe Complaints Team by email at: complaints-enquiries@lloyds.com. Alternatively
managing agents can contact the Complaint Handling Helpline on 020 7327 5696.
Copies of all relevant material including full details for all in-scope countries can be found atwww.lloyds.com/complaintshandling.

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Appendix 1 - Process to be followed for US Complaints
Lloyd’s has set out the process to be followed for international (non-UK) complaints inMarket Bulletin Y4961. For USA complaints the process to be followed is modified in anumber of respects as set out below. These changes reflect local regulatory and legal
requirements and market practice.
What is a complaint?
Lloyd’s complaints handling requirements for USA complaints apply to complaints thatmeet the following definition:“A complaint is any written communication where there is an expression of
dissatisfaction with an insurance product or service.”

Which complainants?
Only complaints from the following are in-scope:oooo

Personal lines policyholders (private individuals);
Small commercial policyholders (where the policyholder has fewer than 10
employees and a gross revenue or annual balance sheet that does not exceed$2.5m);
A charity which has an annual income of less than $2.5m at the time thecomplainant makes the complaint;
A trustee of a trust which has a net asset value of less than $2.5m at the time thecomplainant makes the complaint.

What is the process to be followed for handling complaints?
Managing agents should have in place arrangements for acknowledging and handlingcomplaints received directly from policyholders (Direct Complaints) in accordance withthe relevant USA laws and regulations and which meet USA best practice. Where thecomplaint is received via a Department of Insurance (or equivalent agency) (DOIComplaints), the DOI will provide instructions on what steps to follow.

The following timescales are intended to reflect current best practice:ooo

Direct Complaints may be resolved informally if verbal resolution is reachedwithin three business days.
Direct Complaints (not resolved informally) should receive a written
acknowledgement of the complaint promptly and, where possible, within threebusiness days of receipt of the complaint.
Direct Complaints (not resolved informally) should receive a full response to thecomplaint as soon as practicable and in any event within eight weeks of thecomplaint being received. Standard USA business practice is to issue aresponse within two weeks of a complaint being received and therefore in theevent that a full response cannot be issued within four weeks the complainant

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oshould receive an ‘investigation ongoing’ letter explaining the present position
and when the full response is anticipated.
DOI Complaints should be dealt with in accordance with any directions of therelevant DOI for the handling of complaints.

Providing full response letters
When providing a full response to a Direct Complaint, the managing agent (or theircoverholder/TPA) must include details of the appropriate DOI (or equivalent agency)
and the complainant should be informed that if they remain dissatisfied, they may beable to refer the complaint for review by that DOI. If the complaint is subsequently
referred to the DOI, a copy of the letter from the DOI and any response should be sent
to Lloyd’s.

Direct Complaints may be resolved verbally (ie with no written response provided) ifresolution is within three days. Lloyd’s believes that complaints that are not resolved
informally within three days should have a written full response.

How should complaints be notified to Lloyd’s?
Within two weeks of receipt of a Direct Complaint and by the end of the next business
day after receipt of a DOI Complaint, the Lloyd’s Complaint Notification Template must
be completed with details of the complaint received and sent tointernationalcomplaints@lloyds.com.
ooThere is no need to include complaints that were brought to the attention of themanaging agent (or their coverholder/TPA) by Lloyd’s.
There is no requirement for a “nil return” where no new complaints have been
received.

A copy of the full response together with a copy of the original complaint must beemailed to internationalcomplaints@lloyds.com within two business days after theresponse is sent to the complainant. Where the complaint was resolved informallywithin three day, a summary of the outcome should be sent to Lloyd’s. This should
include details of any redress or remedial action.

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