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Document Sample
The Market Reform
Lineslip Guidelines
October 2006
The Market Reform Lineslip
Table of Contents
1. Introduction.................................................................................................................. 3
2. Scope .......................................................................................................................... 3
3. Out of Scope ............................................................................................................... 3
4. The Franchise Board Mandate .................................................................................... 3
5. Enforcing & monitoring the use of the Lineslip ............................................................ 4
6. Variations to the Lineslip ............................................................................................. 4
7. Structure of the Lineslip ............................................................................................... 4
7.1 Panel 1 removal ........................................................................................................... 5
7.2 General ........................................................................................................................ 6
7.3 Contract Details Section ............................................................................................... 7
7.4 Subscription Agreement Section .................................................................................. 7
7.5 Fiscal and Regulatory Section...................................................................................... 7
7.6 Security Details Section ............................................................................................... 7
8. Declarations ................................................................................................................ 8
9. Further Information ...................................................................................................... 8
APPENDIX A – Market Reform Lineslip ............................................................................. 9
APPENDIX B – FSA Client Classification Headings Defined ........................................... 27
APPENDIX C – Expert Fees Collection ............................................................................ 28
APPENDIX D – Hold Cover Provisions ............................................................................ 29
APPENDIX E – Line Conditions ....................................................................................... 30
APPENDIX F – Unique Market Reference Guidance ....................................................... 32
APPENDIX G – Guide to Order Hereon ........................................................................... 33
Page 2 of 33
The Market Reform Lineslip
1. Introduction
The LMP Lineslip was introduced in June 2005 and was mandated by the Lloyd’s
Franchise Board for Lineslip business incepting from the 1 October 2005 (for reference
see the LMP Lineslip June 2005. This Market Reform Lineslip October 2006 replaces the
LMP Lineslip June 2005. These guidance notes have been updated to reflect changes in
the exemptions to the mandate, regulatory changes, and feedback from the market. The
changes made in this version of the Lineslip are designed to align it with the Contract
Certainty Code of Practice guidance issued by the Market Reform Group (MRG). This
document sets out details of the Lineslip and defines the business that falls within the
scope of the Lloyd’s Franchise Board mandate.
2. Scope
Lineslips are used by Brokers for example to access a group of Insurers who wish to
delegate their authority to enter into contracts of insurance to another Insurer in respect of
business introduced by a Broker named in the agreement1.
The Market Reform Lineslip should be used for the following:-
All Lineslips placed by London Market Brokers where the Lineslip falls within the
definition of London Market Business as specified in the Contract Certainty Code of
Practice issued by the MRG.
N.B Some practitioners use the term “Marine Covers” to describe Lineslips for Marine
business where there is no common insured across the declarations bound. These are
Lineslips and must follow the Lineslip guidelines.
3. Out of Scope
The Market Reform Lineslip must not be used for:-
Binding Authorities as these have separate guidelines-
Refer to http://www.marketreform.co.uk/Binding_pubs1.htm
Marine Open Cargo Covers and Declarations attaching thereto. A Marine Open
Cargo Cover is held by an insured where such Insured has or is expected to acquire,
an insurable interest in each declaration bound.
Declarations or Offslips attaching to Lineslips as these must follow the Market Reform
Slip June 2006 guidelines.
4. The Franchise Board Mandate
The Franchise Board has prescribed the following standards and arrangements for the
conduct and administration of insurance business at Lloyd’s provided always that failure
to comply with these standards and arrangements shall not invalidate or call into question
any contract or agreement entered into by or on behalf of a managing agent or syndicate
nor shall failure to comply with these standards and arrangements create any right of
action or claim in any third party against a managing agent or syndicate, the authority to
enforce compliance being exclusively vested in the Franchise Board –
1
Where a Lloyd’s syndicate participates on the Lineslip, the business must be introduced by a named
Lloyd’s Broker.
Page 3 of 33
The Market Reform Lineslip
(a) as from 2nd January 2004, a managing agent shall not permit the syndicate stamp of
a syndicate managed by it to be affixed to any slip which relates to a contract or
contracts of insurance unless –
(i) the slip is in the format, from time to time issued by the MRG and the information
contained in the slip has been properly completed in accordance with the
relevant guidelines issued by the MRG
(ii) the slip is marked “Market Reform Slip Exempt – Client Requirement”; or
(iii) the slip relates to motor business, personal lines business or term life insurance
business and the slip will not be processed by LPSO Limited;
(b) as from 28th October 2004, a managing agent shall not permit the syndicate stamp of
a syndicate managed by it to be affixed to any binding authority unless the slip has
been completed in accordance with the relevant slip guidelines from time to time
issued by the MRG.
(c) as from 1st October 2005, a managing agent shall not permit the syndicate stamp of a
syndicate managed by it to be affixed to any Lineslip unless the Lineslip has been
completed in accordance with the relevant Lineslip guidelines from time to time issued
by the MRG.
This means that:
a) Lineslips cannot be marked as “Client Exempt”; and
b) Declarations off Lineslips can only be marked as “Client Exempt” if
required by the client.
5. Enforcing & monitoring the use of the Lineslip
The Market Reform Programme Office (MRPO), in co-operation with the LMBC, the
IUA and the LMA, is in continuous dialogue with firms about improving quality, with
the aim of providing education and guidance to improve market standards.
6. Variations to the Lineslip
The following are valid variations to the Lineslip as incorporated into this document.
6.1 The order of Lineslip headings in the CONTRACT DETAILS section is not fixed.
6.2 There will be contract specific Lineslip headings that will need to be incorporated into
the Lineslip to allow for any unusual or additional CONTRACT DETAILS as deemed
necessary.
7. Structure of the Lineslip
Previous versions of the Lineslip consisted of three distinct “Panels” of information
namely:-
Panel 1 - Data Form for bureau processing
Panel 2 - Four separate sections namely CONTRACT DETAILS, SUBSCRIPTION
AGREEMENT, INFORMATION and FISCAL AND REGULATORY
Panel 3 - Insurer security details
As part of the ongoing market reform to standardise the placing process it has been
agreed to remove Panel 1 from all Market Reform Lineslips. To simplify the structure of
the Lineslip the concept of Panels has been dropped and there are now five distinct
Page 4 of 33
The Market Reform Lineslip
sections. What was called Panel 3 now becomes the SECURITY DETAILS section. This
structure is shown in the diagram below.
OLD LMP LINESLIP STRUCTURE MARKET REFORM LINESLIP STRUCTURE
PANEL PANEL 2 PANEL CONTRACT DETAILS
1 CONTRACT DETAILS
3
SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT
INFORMATION
INFORMATION FISCAL & REGULATORY
FISCAL & REGULATORY SECURITY DETAILS
Some contracts have previously required an additional Panel 1 form to be produced,
known as LPO301B forms for more complex bureau processing. These are no longer
required. However, Brokers should continue to provide LPO208 forms as necessary
where current market practice requires their use
7.1 Panel 1 removal
The data from Panel 1 can be categorised into:-
A) Data that can be incorporated in existing Lineslip headings.
B) Data that is required and will be captured in new/additional headings within the
body of the Lineslip; and
C) Data that is obsolete.
A: Incorporate data in existing Lineslip headings
Current Panel 1 Data Already Captured Under
Items Heading Name Lineslip section
Unique Market Unique Market Reference Contract Details
Reference
Policy Number Unique Market Reference or Contract Details
Lineslip Reference
Gross Premium Premium Contract Details
B: Incorporate data in new/additional Lineslip headings
Current Panel 1 Data Now Becomes
Items Heading Name Lineslip section
Written Lines Basis of Written Lines Subscription Agreement
Order/Closed For Order Hereon Contract Details
Settlement Due Date Settlement Due Date Subscription Agreement
Risk Codes Risk Codes Fiscal and Regulatory
Page 5 of 33
The Market Reform Lineslip
C: Obsolete Panel 1 data
Current Panel One Data Item Reason why data is obsolete
Assured/ Reassured Account As there are many different Assureds/Reassureds under
a Lineslip this heading is not required.
This information was an unnecessary repetition of the
Currency currency of the premium already shown in the Lineslip.
Slip Registration Slip Registration scheme no longer active.
Binding Authority Registration Number
and Date Not applicable for Lineslips
TOC Tribunal The tribunal has now disbanded.
Adjustable Scheme Indicator Not applicable for Lineslips
USB/NUS/US No longer required
VAT Code Information not required from Broker
DTI Code Information no longer required.
Serial Number Reference field not used.
Certificate Numbers Information no longer required.
EC-CCI/ Establishment/Services/NA No longer an EU regulatory requirement.
UMR is primary reference. Other references such as this
Brokers Cover Number do not need to be advised to the bureau or Insurers.
Gross Premium (War) All premiums are shown under the PREMIUM heading.
Where applicable, a CPA clause will be shown under
CPA Indicator (War) CONDITIONS heading.
Xchanging already have this information in their enquiry
Bureau Scheme Number systems thus do not do need Broker to quote it.
The totals for each bureau will no longer be required as
Bureau Signed line shares these will be calculated by XIS
Majority of Brokers never use it and those that do
Reference Number confirmed that they do not need it in the Lineslip.
As there may be many different Overseas Brokers under
Overseas Broker a Lineslip this heading is not required.
As this is likely to vary by Declaration this heading is not
Country of origin required.
DEF No premium will be paid via bureau deferred
scheme hence, irrelevant heading.
ADJ No final adjustment of premium hence, irrelevant
heading.
7.2 General
There are five separate sections called CONTRACT DETAILS, SUBSCRIPTION
AGREEMENT, INFORMATION, FISCAL & REGULATORY and SECURITY DETAILS.
The inclusion of the Contract Details heading in the Lineslip is optional, not the
content. The other four section headings must be included.
Standard headings exist for the Subscription Agreement, Fiscal and Regulatory and
Information sections. The Subscription Agreement section headings must not be
changed, deleted, reordered or added to in any way. Furthermore the Subscription
Agreement section must not include any additional headings.
Where monetary amounts are stated on the Lineslip the currency must be clearly and
unambiguously identified and should not use symbols such as “£” or “$”. A commonly
accepted way of achieving this is to use the relevant three letter ISO currency code,
e.g. USD.
A Lineslip must not include any terms which are unspecific or create ambiguities, for
example any TBA’s (To Be Agreed/Advised). It is a requirement for Contract Certainty
that there is agreement of all terms between the insured and Insurers before the
Page 6 of 33
The Market Reform Lineslip
Insurer formally commits to the contract. However if declarations are likely to differ
greatly from each other and therefore terms can not easily be specified on the Lineslip
it is permissible to put words similar to “to be agreed each and every insurance
bound”.
Where a non-registered/non-standard wording is agreed in the Lineslip a copy of the
agreed wording must be submitted to Xchanging Ins-sure Services with each
insurance bound if and when applicable.
7.3 Contract Details Section
During placing the Broker and Insurers must ensure that the Lineslip clearly states all
the contract terms, references or attaches all Registered Wording and Registered
Clauses where used and attaches all bespoke and non-Registered Wording and non-
Registered Clauses in full.
Standard Lineslip provisions must be relevant to the risk or the administration of that
risk.
The heading Signing Provisions is now a mandatory heading to be completed on all
Lineslips and has been moved to the Contract Details section. Any variation of signed
lines resulting from these signing provisions will need to be the subject of documented
agreement of the parties to the contract i.e. Brokers and Insurers. The use of the
instruction “Line to Stand” or equivalent is valid. The use of any other signing
instructions, e.g. “X% to sign Y%” leads to ambiguity and must be avoided.
7.4 Subscription Agreement Section
Insurers must not delete the Subscription Agreement section of the Lineslip or use
Stamp Conditions that specify “No Subscription Agreement” or “Ex Subscription
Agreement” or similar. If there are particular provisions Insurers do not wish to apply
to them, these can be explicitly stated against the relevant Subscription Agreement
heading or in exceptional circumstances not catered for in the Subscription
Agreement, be specified as a Line Condition. Refer to Appendix E for guidance.
The General Underwriters Agreement (GUA) must not be used on Lineslips or
declarations off Lineslips.
7.5 Fiscal and Regulatory Section
Additional headings have been incorporated in the Fiscal and Regulatory section to
accommodate additional regulatory information required as a result of Panel 1
becoming obsolete.
7.6 Security Details Section
The Contract Certainty Code of Practice requires Insurers to phase out the use of
Stamp and Line Conditions and accordingly these should be phased out during 2006.
Stamp Conditions should be removed and recorded elsewhere, as per the guidance in
Appendix E. Only certain Line Conditions that are relevant to the risk and cannot be
specified elsewhere may remain in the Security Details section after the
implementation period has elapsed.
If Line Conditions are still necessary they must not contain acronyms or abbreviations
but should state the condition in full, for example “No LOC” should be stated “No
Letters of Credit”. For further guidance refer to Appendix E.
A detailed definition of the mandatory headings required in each section of the Lineslip
can be found in Appendix A.
Page 7 of 33
The Market Reform Lineslip
8. Declarations
Declarations off Lineslips should follow the Market Reform Slip guidelines for open
market (refer to. http://www.marketreform.co.uk/slip_documentation1.htm)
The General Underwriters Agreement (GUA) must not be used for Declarations
off Lineslips. Endorsements should be agreed by the same agreement parties
that agreed the Declaration off the Lineslip. Where an endorsement makes a
change that, in the opinion of the agreement parties, may impact all Insurers the
agreement parties should refer the endorsement to all Insurers. For example an
endorsement may add an additional class of business which some Insurers
may not be able to or wish to underwrite.
The UMR and LPSO Signing number and date for the Lineslip must be shown
clearly on the Declarations off the Lineslip.
Each Declaration off the Lineslip must have a separate UMR
A Declaration off a Lineslip should not contain open market lines unless
expressly permitted by the Lineslip.
All Declarations off Bulking Lineslips with one or more subscribing Lloyd’s
Insurer(s) must be submitted to XIS for Stage 2 signing.
All Declarations off Non-Bulking Lineslips with one or more subscribing Lloyd’s
Insurer(s) must be submitted to XIS for Stage 1 and Stage 2 signing
9. Further Information
For further information on the Market Reform Lineslip or any of the other market reforms please
contact:
Type of Query Contact Address
General Steve Hulm – MRPO Gallery 7
Queries Tel: 020 7327 5249 Lloyd’s
Fax: 020 7327 5227 1 Lime Street
Email: steve.hulm@lloyds.com LONDON
Brokers Mark Knight – LMBC BIBA House
Tel: 020 7397 0252 14 Bevis Marks
Fax: 020 7626 0564 LONDON
Email: mark.knight@lmbc.co.uk
Lloyd’s Adrian Graham - LMA Suite 1085
Insurers Tel: 020 7327 8378 Lloyd’s
Fax: 020 7623 9390 1 Lime Street
Email: adrian.graham@lloyds.com LONDON
IUA Insurers John Hobbs – IUA Suite 7
Tel: 020 7617 4445 LUC
Fax: 020 7617 4440 3 Minster Court
Email: john.hobbs@iua.co.uk LONDON
Page 8 of 33
The Market Reform Lineslip
APPENDIX A – Market Reform Lineslip
CONTRACT DETAILS
LINESLIP STRUCTURE LINESLIP EXAMPLE
UNIQUE MARKET This reference can be incorporated as a Unique Market B0123ABC1234
REFERENCE: separate heading or as a header on each page Reference:
of the Lineslip. It is used to distinguish individual
insurance contracts. It must start with “B”
followed by the Lloyd’s Broker number and then
a unique reference which cannot have more
than 12 alphanumeric characters. Refer to
Appendix F for guidance on correct completion.
TYPE: The type of Lineslip, either Bulking or Non- TYPE: Non-Bulking Lineslip/ Bulking Lineslip*
Bulking. (* Delete as applicable)
FORM FOR EACH The NMA reference or other identification FORM FOR EACH As agreed by the agreement parties for each
INSURANCE of the policy jacket. Where this is the same INSURANCE insurance bound
BOUND: on each insurance bound it can be BOUND:
specified here. Where it is likely to vary by
declaration “As agreed by the agreement
parties for each insurance bound” should
be stated
LINESLIP The Lineslip reference used by the Broker LINESLIP DEF1
REFERENCE: to identify the Lineslip. This can be a REFERENCE:
number or a name. If this is the same as
the UMR then this heading may be omitted.
Page 9 of 33
The Market Reform Lineslip
LINESLIP STRUCTURE LINESLIP EXAMPLE
BROKER: The name and address of the Broker BROKER: XYZ Broker Ltd
responsible for placing the Lineslip and 123 Wickley Road
administering the Lineslip. Where the London
Lineslip may be used by other Brokers this United Kingdom
should be specified. L20 1MP
The authorised classes of business and Commercial Property
AUTHORISED AUTHORISED
coverages that may be accepted under the
CLASSES OF CLASSES OF
Lineslip.
BUSINESS AND BUSINESS AND
COVERAGES: COVERAGES:
Any exclusions that apply to the classes of Excluding terrorism perils
EXCLUSIONS EXCLUSIONS
business and coverages specified in the
WITHIN THE WITHIN THE
previous heading.
AUTHORISED AUTHORISED
CLASSES OF CLASSES OF
BUSINESS AND BUSINESS AND
COVERAGES: COVERAGES:
Page 10 of 33
The Market Reform Lineslip
LINESLIP STRUCTURE LINESLIP EXAMPLE
PERIOD: The Period of the Lineslip. This should be PERIOD: Risks attaching during the period:
specified on a “risks attaching basis” and From: 1st June 2006
must include the inception date and time To: 31st May 2007
of day, expiry date and time of day and the Both days inclusive any time zone.
time zone. As an alternative to specifying
the time of day it is acceptable to specify
both days inclusive, although the time
zone is still required.
Where a Lineslip accepts business from
anywhere in the world then the phrase
“Any Time Zone” is acceptable. Lineslips
should be for no more than 12 months
from inception. However, subject to the
agreement of the agreement parties
specified under “Basis of Agreement to
Lineslip changes”, it is possible to extend
the period of the Lineslip, but in no event
should it exceed 18 months from
inception.
For Lineslips where specific dates of
inception or expiry are not known, for
example voyages, constructions and
sporting events, the specific events
dictating the period must be stated.
EXTENSIONS OF The extent and duration of any extensions EXTENSIONS OF This Lineslip may be extended for a period of
PERIOD OF to the period of the Lineslip that may be PERIOD OF up to XX months subject to the agreement of
LINESLIP: given and who needs to agree such LINESLIP: the agreement parties specified under Basis
extensions. The agreement parties for such Of Agreement To Lineslip Changes.
extensions in period are to be shown under
the “Basis Of Agreement To Lineslip
Changes” heading in the Subscription
Agreement section.
Page 11 of 33
The Market Reform Lineslip
LINESLIP STRUCTURE LINESLIP EXAMPLE
MAXIMUM PERIOD The maximum duration of any Declaration MAXIMUM PERIOD
No insurance shall be bound for a period
OF EACH off a Lineslip including any provisions for OF EACH
greater than XX months plus odd time, not
INSURANCE odd time and extensions. The agreement INSURANCE
exceeding XX months in all plus any
BOUND: parties for such extensions must be shown BOUND:
extensions as may be agreed by the
under the “Agreement Parties for Each
agreement parties for each insurance bound.
Insurance Bound” heading in the
Subscription Agreement section.
ORDER HEREON Slip closings i.e. whether the signed lines ORDER HEREON:
100% of 100%.
are percentages of the whole or
percentages of the slip’s order. The
percentage of slip order also needs to be
clearly specified. This heading should be
completed in the format X% of Y%. Both
percentages must be completed on all
contracts. Refer to Appendix G for
guidance on correct completion.
MAXIMUM LIMITS The maximum limits of Liability/Sums MAXIMUM LIMITS Maximum GBP XX,XXX,XXX each and every
OF LIABILITY/ Insured for each insurance bound. OF LIABILITY/ loss each insurance bound.
SUMS INSURED SUMS INSURED
FOR EACH FOR EACH
INSURANCE INSURANCE
BOUND: BOUND:
MAXIMUM The maximum aggregate limits for all MAXIMUM Maximum GBP XX,XXX,XXX
AGGREGATE insurances bound. AGGREGATE LIMIT
LIMIT(S)
Page 12 of 33
The Market Reform Lineslip
LINESLIP STRUCTURE LINESLIP EXAMPLE
TERRITORIES The country of domicile of the insureds that TERRITORIES Anywhere in the world
FROM WHICH may be bound. FROM WHICH EACH
EACH INSURANCE MAY
INSURANCE MAY BE BOUND:
BE BOUND:
TERRITORIAL The territories and geographical limits of TERRITIORIAL Anywhere in the world
LIMITS OF EACH each insurance bound. LIMITS OF EACH
INSURANCE INSURANCE
BOUND: BOUND:
CONDITIONS OF Identification, qualification or variation in CONDITIONS OF Each insurance bound shall include:
EACH INSURANCE perils including the wording, clauses, EACH INSURANCE
BOUND: conditions and amendments to any clauses BOUND: XYZ wording as may be agreed by the
in basic form including any applicable agreement parties for each insurance bound
territorial wordings. All standard wordings
and clauses must be clearly identified by
name and reference. Any non-standard
wording or clauses must be referred to
here and attached to the Lineslip.
NOTICES OF An optional heading where any notices other NOTICES OF EACH Lloyd's Privacy Statement LSW1135B
EACH INSURANCE than “Several Liability Notice” must be recorded. INSURANCE
BOUND: E.g. Lloyd’s Privacy Statement LSW 1135 B. BOUND:
Page 13 of 33
The Market Reform Lineslip
LINESLIP STRUCTURE LINESLIP EXAMPLE
EXPRESS Any express warranties that apply to each EXPRESS (To be inserted if any).
WARRANTIES OF insurance bound, over and above any that WARRANTIES OF
EACH INSURANCE may be incorporated in the Policy Form or EACH INSURANCE
BOUND implied warranties from legislation such as BOUND
the Marine Insurance Act 1906, including
the consequences of non-compliance. If
there are no express warranties this
heading would not be included.
CONDITIONS Any conditions precedent that apply to CONDITIONS (To be inserted if any).
PRECEDENT OF each insurance bound, over and above PRECEDENT OF
EACH INSURANCE any that may be incorporated in the Policy EACH INSURANCE
BOUND: Form or legislation, including the BOUND:
consequences of non-compliance. If there
are no conditions precedent this heading
would not be included.
SEVERAL The several liability notice that applies to SEVERAL The subscribing Insurers obligations under
LIABILITY OF THE the Lineslip. LIABILITY OF THE contracts of insurance to which they
LINESLIP: LINESLIP: subscribe are several and not joint and are
limited solely to the extent of their individual
subscriptions. The subscribing Insurers are
not responsible for the subscription of any co
–subscribing Insurer who for any reason
does not satisfy all or parts of its obligations.
Page 14 of 33
The Market Reform Lineslip
LINESLIP STRUCTURE LINESLIP EXAMPLE
CHOICE OF LAW & The court that will have jurisdiction in the CHOICE OF LAW & This Lineslip shall be governed by and
JURISDICTION OF event of a dispute between the Broker and JURISDICTION OF construed in accordance with the laws of
THE LINESLIP: Insurers over the terms of the Lineslip, and THE LINESLIP: England and Wales and each party agrees to
the law that will apply. Further Lloyd’s submit to the exclusive jurisdiction of the
information on this heading is available in courts of England and Wales.
Lloyd’s bulletins Y3406 and Y3327 and for
LMA members letter LTM04-056-WFR
CHOICE OF LAW & The court that will have jurisdiction in the CHOICE OF LAW & As agreed by the agreement parties for each
JURISDICTION OF event of a dispute between the Insured and JURISDICTION OF insurance bound.
EACH INSURANCE Insurers over the terms of the insurance EACH INSURANCE
BOUND: bound, and the law that will apply. Further BOUND:
Lloyd’s information on this heading is
available in Lloyd’s bulletins Y3406 and
Y3327 and for LMA members letter LTM04-
056-WFR
PREMIUM: The basis of any premium calculations that PREMIUM: As agreed by the agreement parties for each
will be used on each insurance bound. insurance bound.
GROSS PREMIUM The gross premium income limit that the GROSS PREMIUM GBP XX XXX XXX
INCOME LIMIT: agreement parties may enter into under the INCOME LIMIT:
Lineslip.
NOTIFIABLE The Broker shall monitor the total gross NOTIFIABLE 75%
PERCENTAGE OF premium income bound and notify the PERCENTAGE OF
THE LIMIT NOT TO Insurers immediately if it becomes THE LIMIT NOT TO
EXCEED: apparent that the total gross premium EXCEED:
income is likely to exceed the percentage
of the limit stated.
Page 15 of 33
The Market Reform Lineslip
LINESLIP STRUCTURE LINESLIP EXAMPLE
PAYMENT TERMS: Non-Bulking Lineslips Only PAYMENT TERMS: 60 day premium payment condition – LSW3000
The Premium Payment Terms applied to
each Declaration off the Lineslip. Should or
include Premium Payment Warranties or
Conditions. N.B. if there are no payment As agreed by the agreement parties for each
terms then this can either be left blank or be insurance bound
shown as Not Applicable
OR
OR
PREMIUM Bulking Lineslips Only PREMIUM Monthly
BORDEREAU(X) This heading only applies to Bulking BORDEREAU(X)
INTERVAL: Lineslips where bulk premium settlements INTERVAL:
are to be made to Insurers via a premium
bordereau. This shows how often such
bordereau(x) are to be settled. e.g. monthly.
Premium Payment Warranties should not be
applied to declarations off Bulking Lineslips.
TOTAL The maximum total Brokerage allowance or TOTAL As agreed by the agreement parties for each
BROKERAGE: fee. BROKERAGE: insurance bound up to a maximum of XX%
of gross premium.
OTHER Any additional deductions from premium OTHER As agreed by the agreement parties for each
DEDUCTIONS e.g. administration fees, sundry payments. DEDUCTIONS insurance bound.
FROM PREMIUM: FROM PREMIUM:
or
None
Page 16 of 33
The Market Reform Lineslip
LINESLIP STRUCTURE LINESLIP EXAMPLE
TAX PAYABLE BY Any premium taxes and charges payable TAX PAYABLE BY As agreed by the agreement parties for each
THE INSURED by the (re)insured in addition to the THE INSURED AND insurance bound.
AND premium stated above, which are collected ADMINISTERED BY
ADMINISTERED and/or administered by Insurers for each UNDERWRITERS
BY insurance bound e.g. 5% UK Insurance FOR EACH
UNDERWRITERS Premium Tax. Any premium taxes and INSURANCE
FOR EACH charges payable by Insurers should be BOUND:
INSURANCE shown in the Fiscal & Regulatory section.
BOUND:
PROFIT Details of any contingent or profit PROFIT None
COMMISSION: commission that may apply to the Lineslip. COMMISSION:
An agreed formula for calculating profit
commission must be attached.
CANCELLATION The number of days notice that CANCELLATION This Lineslip is subject to XX days notice of
NOTICE OF THE Broker/Insurer must give in order for the NOTICE OF THE cancellation from either the Slip Leader or the
LINESLIP: Lineslip to be cancelled. LINESLIP: Broker.
RECORDING, Details of procedures for storage of data, RECORDING, Where the Broker maintains risk and claim
TRANSMITTING & documents and other information. This TRANSMITTING & data/information/documents the Broker may
STORING heading is optional. STORING hold data/information/documents
INFORMATION: INFORMATION: electronically.
SIGNING Slips must contain signing provisions SIGNING Model signing provisions for open-market
PROVISIONS: detailing how the signed lines will be PROVISIONS: risks are published on the market reform
determined. website
(http://www.marketreform.co.uk/contractcerati
nty_guidance2.htm - Signed Lines Guidance);
these can be modified as required for
lineslips.
Page 17 of 33
The Market Reform Lineslip
SUBSCRIPTION AGREEMENT
LINESLIP STRUCTURE LINESLIP EXAMPLE
SLIP LEADER OF State who is the Slip Leader for the SLIP LEADER OF ABC Syndicate
THE LINESLIP: Lineslip. The Slip Leader for each THE LINESLIP:
insurance bound will be specified in
each declaration. If the Slip Leader for
the Lineslip is known when the slip is
produced it must be added by the
Broker. If it is not known when the
Lineslip is produced the Slip Leader
inserts their name here when they
write their line. It is only possible to
have one Slip Leader for London
(Bureau) Market business; however in
situations where a non-bureau lead
exists on the same Lineslip it is
possible to annotate the right hand
side of the Lineslip with the headings
OVERALL SLIP LEADER and
LONDON MARKET SLIP LEADER. In
such cases subsequent provisions will
need to be specific with regard to any
Slip Leader agreements.
Page 18 of 33
The Market Reform Lineslip
LINESLIP STRUCTURE LINESLIP EXAMPLE
SETTLEMENT DUE Please note that the date shown here is SETTLEMENT DUE For a Non Bulking Lineslip:
DATE: not a “Premium payment warranty” or a DATE: 90 days from inception of each insurance
“Premium payment condition”. These bound.
must continue to be shown under the
“Payment terms” heading in the or
CONTRACT DETAILS section. If an
underwriter requires the settlement due For a Bulking Lineslip:
date to be the same on each XX days from the end of each Premium
declaration the number of days from the Bordereau(x) Interval
inception date of each declaration
should be shown here. The location of
the SDD in this section of the Lineslip
does not confer any change in legal
effect of the SDD or the implications of
non-compliance
BASIS OF The basis on which subscribing BASIS OF As agreed by the agreement parties for
WRITTEN LINES: (re)Insurers written lines are applied to WRITTEN LINES: each insurance bound.
the order or contract. There are three
variations that may be used. These are
mutually exclusive. No other option may
be entered under this heading. Further
guidance can be found in Appendix H.
The options are:
Percentage of Whole
Percentage of Order
Part of Whole (Can only be
used where orders are
expressed as monetary
amounts and not percentages)
As agreed by the agreement
parties for each insurance
bound.
Page 19 of 33
The Market Reform Lineslip
LINESLIP STRUCTURE LINESLIP EXAMPLE
AGREEMENT State those Insurers who will bind AGREEMENT Slip Leader
PARTIES FOR insurances and any alterations thereto PARTIES FOR GHI Company Ltd
EACH INSURANCE on behalf of the subscribing Insurers EACH INSURANCE
BOUND AND and the method by which reporting to BOUND AND
ALTERATIONS followers is undertaken, if any. ALTERATIONS
THERETO: THERETO:
BASIS OF Specify which Insurers will agree BASIS OF All changes to this Lineslip to be agreed by
AGREEMENT changes to the Lineslip. N.B. The GUA AGREEMENT (specify Agreement Party(ies) here).
TO LINESLIP must not be used on Lineslips. For TO LINESLIP
CHANGES: classes of business where it is market CHANGES:
practice to provide a copy
endorsement to the following market,
the method/media should be specified
here e.g. email, paper, etc.
Page 20 of 33
The Market Reform Lineslip
LINESLIP STRUCTURE LINESLIP EXAMPLE
DOCUMENT The type(s) of evidence of cover to be DOCUMENT As agreed by the agreement parties for
PRODUCTION FOR produced, who produces it, and any PRODUCTION FOR each insurance bound.
EACH INSURANCE particular requirements e.g. any EACH INSURANCE
BOUND: provisions relating to copies of BOUND:
wordings in a foreign language.
The appropriate evidence of cover
including details of security issued
within 30 days of inception. The
appropriate evidence of cover may be
any one of the following:-
Evidence of Cover to be issued
by Insurers or their agent in the
form of a policy document
Evidence of Cover to be
provided by "Broker company
name" in the form of a complete
and accurate copy of the
Declaration off the Lineslip
Evidence of Cover to be
provided by "Broker company
name" in the form of a Brokers
Insurance Document
RULES AND What authority, if any, the Insurers RULES AND None
EXTENT OF ANY have delegated to the Broker in EXTENT OF ANY
AUTHORITY relation to the Lineslip including any AUTHORITY
DELEGATED TO Hold Cover provisions. This should DELEGATED TO
THE BROKER: show the limit of the Broker’s authority. THE BROKER:
(for further information please see
Appendix D)
Page 21 of 33
The Market Reform Lineslip
LINESLIP STRUCTURE LINESLIP EXAMPLE
LINESLIP The procedures and arrangements LINESLIP In the event of non-renewal or cancellation
ADMINISTRATION: agreed between the Broker and ADMINISTRATION: of this Lineslip, all declarations shall run to
Insurers relevant to the ongoing their natural expiry date (including any
administration of the Lineslip. extension of individual Policy periods as
may be agreed by the agreement parties for
each insurance bound), unless cancelled in
accordance with the individual Policy terms
and conditions.
Premiums for all Declarations off the
Lineslip shall be allocated and paid in to the
year of account in which this Lineslip
incepts.
CLAIMS Identity of the claims agreement CLAIMS Claims to be agreed by the Slip Leader and:
AGREEMENT parties for each insurance bound e.g. AGREEMENT
PARTIES: Slip Leader, plus the first IUA company PARTIES: I. the first Lloyd’s syndicate in the
and Xchanging Claims Services event that the Slip Leader is a IUA
company
II. the first IUA company in the event
that the Slip Leader is a Lloyd’s
Syndicate
III. Xchanging Claims services
where there is more than one
participating Lloyd’s managing
agent
IV. All non-bureau Insurers each
for their own proportion
Page 22 of 33
The Market Reform Lineslip
LINESLIP STRUCTURE LINESLIP EXAMPLE
BASIS OF CLAIMS Specify the basis of the claims BASIS OF CLAIMS Claims to be managed in accordance with
AGREEMENT: procedure(s) such as the Lloyd’s 2006 AGREEMENT: the Lloyd’s 2006 Claims Scheme and IUA
claims scheme for Lloyd’s participation claims agreement practices.
and IUA claims agreement practices for
company market participation.
CLAIMS All claims related information with the CLAIMS Broker to enter claim advices into CLASS.
ADMINISTRATION: exception of identification of ADMINISTRATION: All company market bureaux Insurers(s) to
agreement parties and the basis of use CLASS for claims agreement.
claims agreement should be included
here. Clarification is required as to
which Insurers will use CLASS and the
use of email and/or access to
repositories.
RULES AND If any of the claims agreement parties RULES AND ABC Syndicate delegates the management
EXTENT OF ANY specified above have delegated their EXTENT OF ANY of all claims under GBP XX,XXX to
OTHER claims processing and agreement to OTHER Xchanging Claims Services.
DELEGATED any other party this should be specified DELEGATED
CLAIMS here including any limits that may CLAIMS
AUTHORITY: apply, e.g. all claims less than GBP AUTHORITY:
XXXX or experts fees GBP XXXX.
It is unlikely that the Broker will be
aware of any such arrangements that
Insurers may have, so the Insurers who
are the claims agreement parties must
amend this as necessary.
Page 23 of 33
The Market Reform Lineslip
LINESLIP STRUCTURE LINESLIP EXAMPLE
EXPERT(S) FEES The party(ies) responsible for the EXPERT(S) FEES As agreed by the agreement parties for
COLLECTION: collection of experts fees. Where this is COLLECTION: each insurance bound
the same on each insurance bound it
can be specified here. Where it is likely
to vary by declaration “As agreed by
the agreement parties for each
insurance bound” should be stated
There are six options available under
the experts fees collection
arrangements. These options can be
found in Appendix C of this document.
N.B. this heading is optional on
Reinsurance business.
BUREAUX Any specific arrangements relating to the BUREAUX Delinked accounts for each insurance
ARRANGEMENTS: bureaux including administrative ARRANGEMENTS: bound to be presented by Broker to XIS.
arrangements for premium settlement,
delinked accounting, and policy signing
or basis of policy agreement clauses.
NON BUREAUX To be used as appropriate to record and NON BUREAUX (To be inserted if any.)
ARRANGEMENTS: specify provisions relating to Insurers ARRANGEMENTS:
outside of the bureau.
SPECIAL Any other arrangements affecting the SPECIAL (To be inserted if any)
ARRANGEMENTS: contract which cannot be more ARRANGEMENTS:
specifically accommodated in the
preceding headings
Page 24 of 33
The Market Reform Lineslip
INFORMATION
Details of any information provided to Insurers to support the Loss History as provided by the Broker at 1st August
assessment of the Lineslip at the time of placement. Where 2006:
the information is appropriate for inclusion in the Lineslip it
should be shown here. Where the size or format of the Year Net Absolute Premium Incurred Losses
information is not suitable for inclusion the location of the 2002/03: GBP 6,000,000 GBP 4,000,000
information should be clearly referenced under this section 2003/04: GBP 6,500,000 GBP 3,232,897
and should be made available to all Insurers during placing. 2004/05: GBP 8,786,234 GBP 5,675,987
2005/06: GBP 3,000,987 GBP 2,987,564
2006/07: GBP 5,000,000 GBP 3,200,000
Page 25 of 33
The Market Reform Lineslip
FISCAL AND REGULATORY
LINESLIP STRUCTURE LINESLIP EXAMPLE
TAX PAYABLE BY Any premium taxes and charges payable by TAX PAYABLE BY None.
UNDERWRITER(S): Insurers from the premium paid to them e.g. UNDERWRITER(S):
Australian Income Tax. Any premium taxes
and charges payable by the Insured in
addition to the premium which are collected or
administered by Insurers should be shown in
the “Taxes Payable by (Re)Insured and
Administered by Underwriters” heading of the
Contract Details section.
US US Various as per each insurance bound.
CLASSIFICATION: To be entered as appropriate – e.g. if Risk is CLASSIFICATION:
in US Dollars
NAIC CODES: To be included only where US NAIC CODES: Various as per each insurance bound
CLASSIFICATION is “US Reinsurance”.
RISK CODES: These are allocated to the Lineslip by the RISK CODES: Property – P3
leading Lloyd’s syndicate so that the relevant Liability – UA
FDO signings can be completed.
FSA CLIENT To be included on all business. There are 6 FSA CLIENT Various as per each insurance bound.
CLASSIFICATION: possible options, please refer to the Appendix CLASSIFICATION
B of this document for further information.
IS BUSINESS This heading must be included if the FSA IS BUSINESS Various as per each insurance bound.
SUBJECT TO Client Classification heading specifies "Retail" SUBJECT TO
DISTANCE or "Retail Exempt". If the FSA Client DISTANCE
MARKETING Classification heading specifies MARKETING
DIRECTIVE? "Commercial", "Large Risk", “Group Risks" or DIRECTIVE?
"Reinsurance" it should be omitted. Where it
appears the only applicable answers are
"Yes" or "No".
Page 26 of 33
Market Reform Lineslip
APPENDIX B – FSA Client Classification Headings Defined
Classification FSA Classification description
Retail Dealing with a retail (private) customer acting outside of their
trade or profession. Includes sole trader/partnership, where
insurance includes elements of retail risk. [Includes private
large risks within EEA, see Large Risk]
Retail Exempt Exempt insurance warranty risks relating to breakdown, loss
of, or damage to non-motor goods supplied, or travel
insurance for damage to, or loss of, baggage and other risks
linked to travel booked with a travel agent.
Commercial Dealing with a commercial customer
Large Risk Dealing with a commercial customer (Marine, Aviation, or
Transport (MAT), Credit and Suretyship, or Property &
Liability risks (based on meeting two of the following criteria:-
balance sheet size of 6.2m euro, net turnover of 12.8m euro
or have more than 250 employees)). Excludes any large risk
insured in name of a retail customer.
Group Risks A group policy sold to a customer (retail, commercial or large
risk) for the benefit of policyholders in relation to their
common employment occupation or activity where some or all
are capable of being a retail customer (with requirement to
provide a policy summary for policyholders, with policy
available on request)
Reinsurance Reinsurance worldwide.
Please note if the FSA Client Classification heading is completed “Retail” or “Retail Exempt” the
heading “Is Business Subject to Distance Marketing Directive?” must be included and answered
either “Yes” or “No”.
Page 27 of 33
Market Reform Lineslip
APPENDIX C – Expert Fees Collection
Context
As part of the market’s desire for flexibility in the way insurance contracts are processed, an
experts’ fees collection scheme has been previously agreed. This scheme allows affected parties
to choose a collection process best suited to the particular circumstances of the individual policy.
The Market Reform Lineslip includes a slip heading of “Expert(s) Fees Collection” within the
“Subscription Agreement” section. This is where the particular option chosen from the list below
must be recorded.
Options
The options must be selected from and agreed upon by Brokers and Insurers at the time of
placement along with any other qualifications or provisions deemed necessary by any of the
affected parties.
1. Named service provider to collect London market share only.
2. Named service provider to collect all slip security, including overseas.
3. Named service provider to collect only overseas percentages in conjunction with Option One
above.
4. Brokers to collect fees.
5. Broker to collect experts' fees, to be remunerated on a financial basis agreed between the
Insurers and Broker at time of placement.
6. Any other agreement that can be determined between affected parties at time of slip
placement.
N.B. The Slip Leader must ensure that any special fee bill collection arrangements with third party
service providers which the expert in question has in place are not prohibited or adversely affected
by the selection process above.
N.B. Where an option collects fees only in respect of just London or just overseas (Options 1 & 3)
and there are subscribing Insurers from both then more than one option must be specified.
Scope
The slip heading is available to record the necessary information on all Market Reform Lineslips.
The “Expert(s) Fees Collection” heading is optional on reinsurance business but due consideration
should be given to facultative reinsurances where claims control or co-operation clauses may exist
with fees payable by London reInsurers.
Page 28 of 33
Market Reform Lineslip
APPENDIX D – Hold Cover Provisions
Where the Agreement Parties have quoted a premium for a specific risk and have finalised
all contractual terms and conditions for that risk, OR where the Agreement parties have
quoted a premium for a specific risk and have finalised all contractual terms and
conditions for that risk and have required the London Market Broker to resolve a list of
pre-conditions, the Broker can confirm cover to the policyholder upon confirmation that the
pre-conditions have been met.
The Broker in such arrangements cannot vary:
A. the premium or contractual terms and conditions quoted by the Agreement
Parties; and/or
B. the pre-conditions.
For the avoidance of doubt where one or more of the Agreement Parties for each
insurance bound have set a pre-condition for the supply of information pertaining to the
contract within a defined time period, then that agreement party may at the time of setting
that pre-condition, permit the Broker to extend that defined time period by a reasonable
amount of time. Any such permission extended to the Broker must be stated on the
declaration slip and it is recommended that a maximum period of extension is shown.
Page 29 of 33
Market Reform Lineslip
APPENDIX E – Line Conditions
The Contract Certainty Code of Practice requires Insurers to phase out the practice of
applying Stamp and Line Conditions. A Stamp Condition is defined as one which is built
into an Insurers stamp and therefore appears on every risk to which that stamp is applied
by that Insurer. A Line Condition is defined as one manually applied by Insurers on a case
by case basis against their written line.
This appendix identifies how some of the more common Line Conditions should be
managed.
Table 1 lists those Line Conditions that compromise Contract Certainty and should not be
used.
Table 2 lists those Line Conditions that should not be used as provisions are made in the
body of the slip.
Table 3 lists risk specific Line Conditions which are acceptable as they cannot be readily
catered for in the slip. Please note that these risk specific Line Conditions cannot be
stated as Stamp Conditions.
Table 1: Line Conditions that if used breach Contract Certainty requirements
LINE Condition REASON FOR PROHIBITION
Wording to be agreed Contract Certainty requires wordings to be agreed before the Insurer formally commits
to the contract.
All signing instructions other All other signing instructions are imprecise and therefore ambiguous, e.g. X% to sign
than “lines to stand” Y%.
Table 2: Line Conditions provided for in either Contract Details or Subscription Agreement
sections and not the Security Details section
LINE Intended Effect Guidance
Condition
All terms The Insurer Insurers wishing to agree all endorsements for their own proportion should insert
conditions, wants to agree all “XYZ Insurer to agree all terms conditions, amendments, deletions and
amendments, endorsements, endorsements” under the heading BASIS OF AGREEMENT TO LINESLIP
deletions, changes to terms CHANGES.
special and conditions
acceptances and special N.B. The General Underwriter Agreement (GUA) does not apply to Lineslips.
and acceptances, etc
endorsements
to be agreed
Warranted Condition in This is a premium payment term and should be clearly expressed in the
premium relation to the CONTRACT DETAILS section under the “PAYMENT TERMS” heading.
payable within payment of the
60 days of premium,
inception warranting that it
be paid within 60
days of inception.
SDD 14/11/05 Notification of the The Settlement Due Date by which the Insurers wish to receive their premium or
expected the due date of the 1st instalment if the premium is on a deferred basis should be
premium stated under the Settlement Due Date heading in the SUBSCRIPTION
payment date. AGREEMENT section.
Page 30 of 33
Market Reform Lineslip
LINE Intended Effect Guidance
Condition
Excluding Hull Marine exclusion This is a condition to the contract and must be stated under the “Conditions of
War condition of loss, Each Insurance Bound” heading in the CONTRACT DETAILS section of each
damage, liability insurance bound.
or expense
arising from war
to a ship hull.
Claims A condition The RULES AND EXTENT OF ANY OTHER DELEGATED CLAIMS AUTHORITY
Handling providing for XCS heading in the SUBSCRIPTION AGREEMENT section provides for this claims
Authority to agree claims handling arrangement.
delegated to on behalf of the
XCS slip leader.
Each A condition The several liability notice LSW1001 must be stated under the SEVERAL
underwriter to ensuring that LIABILITY heading in the CONTRACT DETAILS section to ensure that all parties
the extent of each Insurer is to the contract are fully aware of the notice.
several liability liable only for
their amount of
risk (Limited
Liability).
All claims to be A condition Insurers wishing to agree all claims should insert their name under the CLAIMS
agreed mandating that a AGREEMENT PARTIES heading in the SUBSCRIPTION AGREEMENT section.
particular carrier N.B. – Lloyd’s syndicates must be mindful of the terms of the Lloyd’s Claims
wants to agree all Scheme 2006 before adding their name as a Claims Agreement Party. Only the
claims. first participating Lloyd’s Insurer (and optionally the second in respect of special
category claims) may agree claims.
Notify A provision N.B. Not permitted for use on a Lineslip
cancellation at commonly found
anniversary in contracts of This is because it is not permitted for use on any slip by Lloyd’s managing
date insurance for agents. Nor is it permitted for use by non-Lloyd’s Insurers unless that
more than a year, contract is continuous and no Lineslip may continue for more than 18
and permits months.
either party to
serve notice of
cancellation at
the anniversary
date, thereby
effectively
reducing the
security of such a
contract to that of
a single year and
enabling parties
to renegotiate for
a subsequent
year.
Table 3: Acceptable Line Conditions
lINE Condition Intended Effect REASON FOR RETENTION
Line to stand A condition to ensure that a A recognised and acceptable line condition.
line stays as it is written and is
not signed down.
Excluding Letters of Credit and A condition imposed by the Risk specific heading particular to reinsurance
Outstanding Claims Advances carrier where they will not business and not catered for in the slip.
(may relate additionally, or only, to provide Letters of Credit and
incurred but not reported (IBNR) Outstanding Claims
claims) Advances.
Page 31 of 33
Market Reform Lineslip
APPENDIX F – Unique Market Reference Guidance
The UMR must be stated in the Contract Details section in the correct format:
(i) All UMRs must start “B” which must be followed by the Lloyd’s Broker
number. If the Broker number is three digits long it should be prefixed by a
zero. If the Broker number is “123” your UMR would therefore start
“B0123”. If the Broker has a four digit Broker number such as “4567” it
would be “B4567”.
(ii) After the Broker number up to 12 alphanumeric characters must be
provided. There is no prescribed standard for this, although most Brokers
tend to use their policy number.
(iii) The UMR as a whole must be unique. This means that when a contract is
renewed it cannot keep the same UMR.
(iv) The UMR must not contain any spaces, hyphens, slashes or other
punctuation. Only numbers 0-9 and letters A-Z may be used.
(v) The UMR is not case sensitive. Whether it is provided as upper case or
lower case, many of the systems and current EDI messages used in the
market will convert it to upper case.
In respect of mid term market changes, where the handling Broker changes,
the new Broker must keep and use the old Broker’s UMR. When the contract
renews the handling Broker can amend the UMR.
Page 32 of 33
Market Reform Lineslip
APPENDIX G – Guide to Order Hereon
This appendix explains how orders may be expressed in the Market Reform Lineslip.
CIRCUMSTANCES OLD PANEL ONE NOTATION MARKET REFORM LINESLIP NOTATION
EXAMPLE A –
PERCENTAGE OF WHOLE % Order Order Closed for ORDER HEREON: 100% of 100%
Written Lines Part Of Whole 100% 100% BASIS OF WRITTEN LINES: Percentage of Whole
Client A gives the Broker a
100% order and they are the
only Broker involved in the
placement.
EXAMPLE B – ORDER HEREON: 50% of 100%
PERCENTAGE OF ORDER BASIS OF WRITTEN LINES: Percentage of order
% Order Order Closed for
Client B gives the Broker a Written Lines Part Of Whole 50% 100% of 50%
50% order and decides to self
insure the rest.
EXAMPLE C – PART OF ORDER HEREON: 50% of GBP 200
WHOLE BASIS OF WRITTEN LINES: Part of whole
% Order Order Closed for
Client C gives a Broker Written Lines Part Of Whole GBP 100 50% of
monetary order of GBP 100 GBP 200
where the total sum insured
was GBP 200. Lines are
written as a monetary amount
as part of the total sum
insured. Signed lines are
shown as part of the sum
insured.
Page 33 of 33
