9. Delegated Underwriting

Question 1

Consortium

Answer 1

A group of insurers which have formed an agreement to accept risks together, in a set proportion

Question 2

Lineslip

Answer 2

Insurers brought together by a broker and take a proportion of a risk

Question 3

Binding authority

Answer 3

Delegated underwriting authority to another entity

Question 4

Why might an insurer delegate underwriting?

Answer 4

Manpower
Local access
Other access

Question 5

MGA vs Coverholder

Answer 5

MGA is a subset of coverholders - they only have insurers as clients unlike a coverholder

Question 6

What does Lloyd’s consider for a new coverholder?

Answer 6

Individuals
Systems and controls
Financial status
Authority in specified territories

Question 7

System for coverholder application

Answer 7

ATLAS

Question 8

Coverholder Undertaking

Answer 8

Formal document of standards expected by Lloyd’s

Question 9

Coverholder authority types

Answer 9

Full authority - complete control granted
Pre determined rates - price matching or discretion at renewal
Pre determined rates with no discretion - no change at all from the rating matrix
Prior submit - all risks referred to UW first

Question 10

3 elements to document coverholder binding agreement

Answer 10

• Binding authority schedule
• Binding authority agreement
• Non-schedule sections

Question 11

Controls over delegated UW

Principle 1 - Underwriting profitability

Answer 11

expects that the UW strategy sets out appetite for use of DA

Process and controls in place
Business written to align with main business plan
Reporting to be suitable to enable challenges to be made
Visibility of costs incurred by use of delegation
Pricing done under contract of delegation

Question 12

Controls over delegated UW

Principle 4 - claims management

Answer 12

A clear articulated appetite for outsourcing of claims

Detailed reporting from any party whom claims are outsourced

Question 13

Controls over delegated UW

Principle 5 - customer outcomes

Answer 13

The conduct culture set by the board promotes good customer outcomes

Question 14

Controls over delegated UW

Principle 11 - regulatory and financial crime

Answer 14

Expects: systems and controls implemented by coverholders to deliver contracted activities are at an appropriate standard and that financial crime training is done

Question 15

Delegated Contract Oversight Manager

Answer 15

Online system used for registration of all Lloyd’s binding authority agreements

Question 16

Benefits of a consortium

Answer 16

Broker - easy placement
Consortium leader - commission / fees
Followers - access to business without seeing a broker
All parties - administration

Question 17

Lineslip declaration

Answer 17

Individual risk presented for agreement by the broker

Question 18

Bulking / non-bulking lineslip

Answer 18

Indicate whether the broker can aggregate premium presentation to Xchanging (bulking) or presented individually (non-bulking)

Question 19

Facility

Answer 19

Another term for lineslip