Delegated Authority Business – Immediate Guidance - COVID 19

31 March 2020 
Delegated Authority Business – Immediate Guidance 
Lloyd’s recognises that the current Covid19 situation is presenting unique 
challenges to many of our consumer and SME customers. In addition, the current 
working restrictions may impact upon the operational arrangements for 
Underwriters, Brokers and Coverholders.  Accordingly, Lloyd’s has decided to 
provide the following market guidance in order to ensure fair outcomes for our 
customers during these unprecedented times.  
However, please note that local regulatory and legal requirements should always be 
met and nothing in the following is intended to supersede or vary those 
requirements. (For example, many US states have issued guidance on 
cancellation/nonrenewal and/or premium grace periods as a result of the covid-19 
1. Premium non payment – Lloyd’s expects Underwriters to ensure that they 
do not automatically cancel policies for consumer and SME customers by 
reason solely of the application of a non-payment of premium clause for a 
period of non-payment for up to 60 days.  Therefore, Underwriters should 
discuss the operation of this clause with their Coverholders to ensure that this 
provision is not being automatically applied regardless of the policyholder’s 
circumstances.  Cancellation may still be made for any other valid reason 
whether in-line with contractual or other legal basis.   
In respect of policies for other customers, Lloyd’s expects Underwriters to 
have regard to the suitability and fairness of applying such a provision. 
2. Extensions of binding authority contracts – We are aware that there are 
currently challenges in completing the renewal of binding authority 
arrangements.  It is preferable that binding authorities are renewed rather 
than extended (even if arranged as a short period renewal pending a full 
However, where an existing binding authority contract is due for renewal, but 
current operational restrictions impede the ability to effect a timely renewal or 
where tacit renewal provisions mean an extension of the binding authority is 
necessary, then Underwriters should consider an extension to the binding 
authority.  Underwriters may give such an extension even if this extends the 
overall binder period to more than the current limit of 18 months (or 36 
months for a 3 year binding authority).  In this case please email 
coverholders@lloyds.com  so that we may keep a record and to obtain an 
email that may be used for Bureau processing.  
Where the effect of the extension would have the effect of overwriting the 
syndicate’s agreed business plan then we expect Underwriters to take a
pragmatic approach having regard to both the interests of customers as well 
as wider prudential considerations.  However, Lloyd’s would not expect an 
extension to be refused solely because it would lead to overwriting a 
business plan.   
3. We are also notifying the following changes intended to reduce the current 
administrative burden on effecting renewals.  These apply with immediate 
effect until otherwise notified - 
(a) We expect the Lead Managing Agent on a Binding Authority to be 
responsible for the binding authority renewal compliance due diligence in 
accordance with the DA Code of Conduct. Key compliance information 
should be uploaded to ATLAS so that followers have access to that 
information and all reasonable efforts should be made to avoid duplication 
of compliance due diligence.  
(b) Currently binding authority contracts need to name each individual who 
has authority in the coverholder to bind risks, issue insurance documents 
or settle claims (and binders need to be endorsed with any changes to 
these named persons).  This would include “remote workers” carrying out 
the above functions who would also be named on the binding authority.   
With immediate effect, only the individual(s) with overall responsibility for 
the binding authority (ie those who would be named in section 3.1 of the 
model binder wording) must be named.  A list of the persons who would 
otherwise be named in sections 3.2, 3,3 and 3.4 and any remote workers 
should be separately maintained on ATLAS.   
In addition, “remote worker application forms” do not need to be 
completed in respect of coverholder staff who are now working from home 
(unless that location is now a new trading location for the coverholder). 
Please refer to following link for further information on this - 
(4) Delegated Claims Resilience – Service continuity of DA service providers, 
particularly TPAs, is being assisted through the LMA’s DA Claims and 
Covid19 Claims Steering Group.  To help enable TPAs to focus on their 
resources and the ability to service customers we would encourage 
managing agents to utilise the LMA’s centralised delegated claims database 
which can assist with operational, service resilience and claims performance 
questions and data. 
Any questions in respect of the above may be sent to coverholders@lloyds.com 
Paul Brady  
Head of Policyholder & Third Party Oversight  
Performance Management  
Telephone      +44 (0)20 7327 5750  

31 March 2020