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The Market Reform Slip

VIEWS: 302 PAGES: 44

									The Market Reform Slip

June 2006

Page 1 of 44

Table of Contents

1. 2. 3. 4. 5. 6. 7.

8

9.

Introduction .......................................................................................................... 3 Scope ................................................................................................................... 3 Out of Scope ........................................................................................................ 3 The Franchise Board Mandate ............................................................................. 3 Enforcing & monitoring the use of the slip ............................................................ 4 Variations to the Slip ............................................................................................ 4 Structure of the Slip .............................................................................................. 5 7.1 Panel 1 removal......................................................................................... 5 7.2 General ...................................................................................................... 7 7.3 Risk Details Section ................................................................................... 7 7.4 Subscription Agreement Section ............................................................... 7 7.5 Fiscal and Regulatory Section ................................................................... 7 7.6 Security Details Section ............................................................................. 8 Slip Headings per section..................................................................................... 8 8.1 Risk Details – All classes of business........................................................ 8 8.2 Risk Details Section – Type of business specific ....................................... 9 8.3 Subscription Agreement Section - All Slips ............................................... 9 8.4 Information Section - All Slips .................................................................. 10 8.5 Fiscal & Regulatory Section-All Slips....................................................... 10 Further Information ............................................................................................. 10 Appendix A: Appendix B: Appendix C: Appendix D: Appendix E: Appendix F: Appendix G: Appendix H Slip Headings Defined An Example of a Compliant Non-Marine Direct Slip FSA Client Classification definitions Expert Fees Collection Stamp/Line Conditions UMR Guidance Model Signing Provisions Guide to Order Hereon 11 19 36 37 38 41 42 44

The Market Reform Slip June 2006

1.

Introduction
The LMP slip was introduced in October 2001 and was mandated by the Lloyd‟s Franchise Board for business incepting from the 2nd January 2004. This Market Reform Slip June 2006 replaces the LMP April 2005 slip. 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 slip 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 slip for open market business and defines the business that falls within the scope of the Lloyd‟s Franchise Board mandate. This document has been agreed by the Market Reform Group.

2.

Scope
The Market Reform Slip should be used for the following: All firm quote and firm order open market insurance and reinsurance business placed by London Market Brokers where the contract falls within the definition of London Market contracts as specified in the Contract Certainty Code of Practice issued by the MRG. All Marine open cargo covers and declarations attaching thereto. Marine open cargo covers are defined as those risks where the insured has, or is expected to acquire, an insurable interest in each declaration bound. All Declarations or offslips attaching to lineslips and applicable declarations off limited binding authority agreements. N.B. The Market Reform Slip may be used for indicative quotes.

 

3.

Out of Scope
The Market Reform Slip must not be used for:   Binding Authorities as these have separate guidelinesRefer to http://www.marketreform.co.uk/Binding_pubs1.htm Lineslips as these have separate guidelinesRefer to http://www.marketreform.co.uk/LMP_lineslip.htm Slips that fall within the Market Reform Slip Exempt – Client Requirement category

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

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 – (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 –

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The Market Reform Slip June 2006

(i)

(ii) (iii)

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 the slip is marked “Market Reform Slip Exempt – Client Requirement”; or 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 slip has been completed in accordance with the relevant slip guidelines from time to time issued by the MRG.

5.

Enforcing & monitoring the use of the slip
The Market Reform Programme Office (MRPO), in co-operation with the LMBC, the IUA and the LMA, is in continuous dialogue with firms about common causes of the deficiency in quality, with the aim of providing education and guidance to improve market standards. Individual feedback sessions are held between the MRPO slip audit team and carriers and Brokers. Reports specific to the carrier or Broker are prepared for each feedback session, highlighting the common errors on slips with details given on how to improve slip quality and appropriate remedial actions. To arrange an individual feedback session for your organisation please contact James.willison@lmpoffice.com. On-site slip checking at the respective carrier is also carried out by the audit team to provide quality feedback and on-site training sessions. In order to communicate progress to the market, the MRPO publishes monthly reports on Slip quality based on the checks conducted by the MRPO slip audit team.

6.

Variations to the Slip
The following are valid variations to the slip as incorporated into this document: 6.1 The order of slip headings in the RISK DETAILS section is not fixed. 6.2 Some slips will be based on policy forms that do not use the standard slip headings. As an example the policy form could include a heading called Name of Client rather than Insured. In these instances it is a requirement that the term used in the policy form be also used in the slip in order to aid contract certainty. 6.3 There will be contract specific slip headings that will need to be incorporated into the slip to allow for any unusual or additional RISK DETAILS as deemed necessary.

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The Market Reform Slip June 2006

7.

Structure of the Slip
Previous versions of the slip consisted of three distinct panels of information namely:Panel 1 Panel 2 Panel 3 Data Form for bureau processing Four separate sections called RISK DETAILS, SUBSCRIPTION AGREEMENT, INFORMATION and FISCAL AND REGULATORY 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 Slips. To simplify the structure of the remaining slip the concepts of panels has been dropped and there are now five distinct sections. What was called Panel 3 now becomes the SECURITY DETAILS section. This structure is shown in the diagram below.
OLD LMP SLIP STRUCTURE MARKET REFORM SLIP STRUCTURE

PANEL 1

PANEL 2
(RISK DETAILS)

PANEL 3

(RISK DETAILS)

SUBSCRIPTION AGREEMENT SUBSCRIPTION AGREEMENT

INFORMATION

INFORMATION

FISCAL & REGULATORY

FISCAL & REGULATORY

SECURITY DETAILS

Some contracts have previously required additional Panel 1 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) B) C) Data that can be incorporated in existing slip headings. Data that is required and will be captured in new/additional headings within the body of the slip; and Data that is obsolete.

A:

Incorporate data in existing slips headings
Already Captured Under Heading Name Slip section Allocation of Premium to Coding Fiscal and Regulatory Insured or Reinsured Risk Details Premium Risk Details

Current Panel 1 Data Items Risk code Assured/Reassured Account Gross Premium

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The Market Reform Slip June 2006 B: Incorporate data in new/additional slips headings
Now Becomes Heading Name Slip section Unique Market Reference Risk Details Basis of Written Lines Order Hereon Settlement Due Date Overseas Broker (Deferred Premium Period Of Credit) (Adjustment Premium Period Of Credit) Country of origin Subscription Agreement Risk Details Subscription Agreement Fiscal and Regulatory Subscription Agreement Subscription Agreement Fiscal and Regulatory

Current Panel 1 Data Items Unique Market Reference Written Lines Order/ Closed For Settlement Due Date Overseas Broker DEF ADJ Country of origin

C:

Obsolete Panel 1 data
Reason why data is obsolete The Unique Market Reference (UMR) is a superior reference since it gives both the Policy number and the Lloyd‟s Broker number and the UMR is now part of RISK DETAILS. This information was an unnecessary repetition of the currency of the premium already shown in the slip. Slip Registration scheme no longer active. XIS have been granted access to the Binding Authority Registration System and can now locate these references in the application. The tribunal is long since disbanded. Xchanging will monitor all final adjustments thus does not need to be specified on a risk by risk basis. No longer required. Information not required from Broker. Information no longer required. Reference field not used. Information no longer required. No longer an EU regulatory requirement. UMR is primary reference. Other references such as this do not need to be advised to the bureau or insurers. All premiums are shown under the PREMIUM heading. Where applicable, a Claims Payable abroad (CPA) clause will be shown under CONDITIONS heading. Xchanging already have this information in their enquiry systems thus do not do need Broker to quote it. The same information can be found in the Security Details section of the slip. Majority of Brokers never use it and those that do have confirmed they do not need it in the slip.

Current Panel One Data Item Policy Number

Currency Slip Registration Binding Authority Registration Number and Date TOC Tribunal Adjustable Scheme Indicator USB/NUS/US VAT Code DTI Code Serial Number Certificate Numbers EC-CCI/ Establishment/Services/NA Brokers Cover Number Gross Premium (War) CPA Indicator Bureau Scheme Number Bureau Signed line shares Reference Number

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The Market Reform Slip June 2006 7.2


General
There are five separate sections called RISK DETAILS, SUBSCRIPTION AGREEMENT, INFORMATION, FISCAL & REGULATORY and SECURITY DETAILS. The inclusion of the Risk Details heading in the slip is optional, not the content. The other four headings must be included. There are standard headings within the Risk Details, 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 slip 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 slip 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 Insurer formally commits to the contract.







7.3


Risk Details Section
During placing the Broker and Insurers must ensure that the slip clearly states all the contract terms, specifies the terms and language to be used in the Evidence of Cover issued to the client, references or attaches all Registered Wording and Registered Clauses where used and attaches all bespoke and non-Registered Wording and nonRegistered Clauses in full. (Note - National Laws (e.g. Marine Insurance Act 1906; German General Rules of Marine Insurance; etc) do not need to be attached in full, as they are in common usage and freely available to all interested parties). A slip can include subjectivities which are/will be outstanding at inception. Subjectivities should be imposed within the slip under the SUBJECTIVITES heading in the Risk Details section. They must not be recorded against insurers‟ lines in the Security Details section. All subjectivities imposed by insurers must specify the responsibilities and timescales for resolution and the consequences of failure. Standard slip 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 slips and has been moved to the Risk Details section. Model signing provisions should be used where possible to provide certainty of signed lines at inception. Any variation of signed lines resulting from these signing provisions will need to be the subject of documented agreement of the (re)insured and all affected (re)insurers. The use of instructions “line to stand” or equivalent is valid. The use of any other signing instructions, e.g. “X% to sign Y%” leads to ambiguity and should be discontinued.



 

7.4


Subscription Agreement Section
Insurers must not delete the Subscription Agreement section of the slip 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.

7.5


Fiscal and Regulatory Section
Additional headings have been incorporated in the Fiscal and Regulatory section to align the Market Reform Slip with the ACORD global placing document.

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The Market Reform Slip June 2006 7.6
  

Security Details Section
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. The Contract Certainty Code of Practice requires insurers to phase out the use of stamp conditions and accordingly these should be phased out during the implementation period of the Market Reform Slip. Such 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 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 slip can be found in Appendix A.

8

Slip Headings per section 8.1 Risk Details – All classes of business
1. The headings in the table below apply to all Market Reform Slips for all classes of business. 2. ** indicates a heading where the slip heading used may differ in order to align with the policy form used. 3. The use of () around a slip heading indicates an optional heading.
MANDATORY HEADINGS FOR ALL SLIPS SLIP HEADING NOTES UMR (Attaching to delegated underwriting contract number) Type Insured or Reinsured Period or Period and Cancellation Provisions or Voyage Sum Insured or Limits or Limits and Retentions/deductibles or Treaty Detail or Treaty Limits Order Hereon Conditions (Notices) (Express Warranties) (Conditions Precedent) (Subjectivities) Several Liability Choice of Law & Jurisdiction Premium or Rate Payment Terms Brokerage Other Deductions from Premium Taxes payable by (Re) Insured and administered by Underwriters (Recording, Transmitting & Storing Information) Signing Provisions Where applicable – Can be omitted if none exist

** ** **

** Where applicable – Can be omitted if none exist Where applicable – Can be omitted if none exist Where applicable – Can be omitted if none exist Can be omitted if none exist

**

** Where applicable – Can be omitted if none exist

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The Market Reform Slip June 2006 8.2 Risk Details Section – Type of business specific

NON-MANDATORY HEADINGS BY TYPE OF BUSINESS Other headings can be included if required Direct & Direct & Facultative R/I Excess of Loss Treaty Non-Marine / Facultative R/I Marine Aviation Non-Marine Form Form Form Vessels or Conveyance Interest Class of Business (& any Exclusions) Situation Interest Territorial Scope Trading Reinstatement Provisions Wording Co-Reinsurance Warranty Loss Reserve & Interest NON-MANDATORY HEADINGS BY TYPE OF BUSINESS Other headings can be included if required Proportional Treaty Proportional Treaty All Declarations, Marine insurance and Non-Marine / reinsurance off Aviation Lineslips Form Interest & any Exclusions Attaching to delegated underwriting contract number Class of Business & Wording any Exclusions Territorial Scope Commission or Overriding Commission Profit Commission Premium Reserve & Interest Loss Reserve & Interest Portfolio Premium Reserve & Interest Loss Reserves & Interest

Excess of Loss Treaty Marine Form

Interest & any Exclusions Reinstatement Provisions

Cash Loss Limit Bordereaux Accounts

8.3

Subscription Agreement Section - All Slips

MANDATORY HEADINGS FOR ALL SLIPS SLIP HEADING NOTES Slip Leader Settlement Due Date Basis of Written Lines (Deferred Premium Period of Where premium is to be paid via bureau deferred scheme Credit) (Adjustment Premium Period of Where applicable Credit) (Other Agreement Parties for Must only be present if the GUA is used Contract Changes, if any) Basis of Agreement to Contract Changes Document Production Claims Agreement Parties Basis of Claims Agreement Claims Administration Rules and Extent of any other Delegated Claims Authority

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The Market Reform Slip June 2006
(Experts Fees Collection) Bureaux Arrangements (Non-Bureaux Arrangements) Optional on Reinsurance risks if none exist Where applicable

8.4

Information Section - All Slips
MANDATORY HEADINGS FOR ALL SLIPS NOTES

SLIP HEADING Information

8.5

Fiscal & Regulatory Section-All Slips

MANDATORY HEADINGS FOR ALL SLIPS SLIP HEADING NOTES Tax Payable by Underwriters Country of Origin Overseas Broker To be entered as appropriate (Surplus Lines Broker) To be entered as appropriate (State of Filing) To be entered as appropriate (Licence Information ) To be entered as appropriate (US Classification) (NAIC Codes) Allocation of Premium to Coding (Allocation of Premium to year of account) FSA Client Classification (Is business subject to distance marketing directive?) To be entered only if premium is in US Dollars To be included only if Risk is US Reinsurance

To be entered as appropriate

To be specified if FSA Client Classification is specified as Retail or Retail Exempt

9.

Further Information
For further information on the Market Reform Slip please contact:

Type of Query General Queries

Brokers

Lloyd‟s Insurers

IUA Insurers

Contact James Willison – Market Reform Programme Office Tel: 020 7327 5231 Fax: 020 7327 5887 Email: james.willison@lmpoffice.com Mark Barwick – LMBC Tel: 020 7397 0207 Fax: 020 7626 0564 Email: mark.barwick@lmbc.co.uk Allison Goddard- LMA Tel: 020 7327 4872 Fax: 020 7623 9390 Email: allison.goddard@lloyds.com John Hobbs – IUA Tel: 020 7617 4445 Fax: 020 7617 4440 Email: john.hobbs@iua.co.uk

Address Gallery 6 Lloyd‟s 1 Lime Street LONDON BIBA House 14 Bevis Marks LONDON Suite 1085 Lloyd‟s 1 Lime Street LONDON Suite LG1 LUC 3 Minster Court LONDON

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APPENDIX A – Slip headings defined
The following headings must be present for all Market Reform slips for all classes of business. Use of the () indicates that if no details are to be entered under that slip heading then it can be omitted.

Risk Details Section – All Classes
HEADING UNIQUE MARKET REFERENCE: DEFINITION This reference can be incorporated as a separate heading or as a header on each page of the slip. 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. This heading is applicable to all declarations off line slips, marine open cargo covers and limited binding authorities that are shown to insurers. This heading should specify the unique market reference to which the declaration in question attaches This heading must incorporate details of the type of Contract e.g. Marine Hull. The (re)insured‟s name, and where appropriate their address and/or business. The inception date and time of day, expiry date and time of day as well as the applicable time zone. As an alternative to specifying both times it is acceptable to specify “both days inclusive”, although the applicable time zone is still required. Where the risk is for a continuous contract the anniversary date is to be included in place of the expiry date, please note that the applicable time zone is still required. However for risks where specific dates of inception or expiry are not known, for example voyages, constructions and sporting events, the specific events determining the period must be stated. On proportional treaty business where the heading Period and Cancellation Provisions is used cancellation provisions, if any, must be stated including reference to what happens to business in force at cancellation, if applicable, and whether there is any option for either party in this respect. On Risks Attaching During contracts it is acceptable to state “any time zone”. Sum insured or reinsured or indemnity or monetary limits.

(ATTACHING TO DELEGATED UNDERWRITING CONTRACT NUMBER): TYPE: INSURED: OR REINSURED: PERIOD: OR PERIOD AND CANCELLATION PROVISIONS: OR VOYAGE:

SUM INSURED: OR LIMITS: OR LIMITS AND RETENTIONS/DEDUCTIBLES: OR TREATY DETAIL: OR TREATY LIMITS: ORDER HEREON:

CONDITIONS:

The heading Order hereon must detail the Slip closings i.e. whether the signed lines are percentages of the whole or percentages of the slips 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 H for guidance on correct completion. Identification, qualification or variation in coverage including the wording, clauses, conditions and amendments to any clauses in basic form. The slip must reference or attach all registered wordings and registered clauses. All nonregistered wordings and non –registered clauses must be attached in full.

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APPENDIX A – Slip headings defined
HEADING (NOTICES): (EXPRESS WARRANTIES): DEFINITION An optional heading where any notices other than Several Liability Notice must be recorded. E.g. Lloyd‟s privacy statement, LSW 1135 B. Any express warranties that apply to the contract, over and above any that may be incorporated in the Policy Form or implied warranties from legislation such as the Marine Insurance Act 1906, including the consequences of noncompliance. If there are no express warranties this heading would not be included. Any conditions precedent that apply to the contract, over and above any that may be incorporated in the Policy Form or legislation, including the consequences of non-compliance. If there are no conditions precedent this heading would not be included. A slip can include subjectivities for example an outstanding survey requirement. Subjectivities must be imposed within the slip, in the Risk Details section and must not be shown in the Security Details section against insurers‟ lines. All subjectivities should set out the condition/action that needs to occur, by whom and to what standard; the applicable timescale within which the condition is to met; the terms which are to apply until the condition is met; and the consequences which are to follow if the condition is not met. If a subjectivity is outstanding at inception then it must be stated as a fully claused condition of the coverage given in the slip and relevant evidence of cover issued. The several liability notice that applies. This must be either the insurance or reinsurance version of LSW1001, and must be included in full on all slips to ensure the (re)insured is fully aware of the notice. The court that will have jurisdiction in the event of a dispute between insured and insurers and the law that will apply. Further Lloyd‟s information on this heading is available in Lloyd‟s bulletins Y3406 Y3327,and for LMA members letter LTM04-056-WFR. The premium to be paid by the insured. Premiums in respect of War coverage must be identified separately to premiums in respect of other insured perils. Any premium instalment information must be shown here and not under the Payment Terms heading. The Premium Payment Terms applied to the contract by the Slip Leader, including Premium Payment Warranties and/or Conditions. The Settlement Due Date must be shown under the Settlement Due Date heading and not here. The Broker should specify whether the client is paying a fee to them. This should be a simple “Yes” or “No” answer. The total brokerage allowance. Should the Broker and insurer agree it is appropriate to separate total brokerage into separate retail and wholesale amounts they must use the „Retail Brokerage‟ and „Wholesale Brokerage‟ headings. The amount of brokerage being earned by the retail Broker. This heading must only be used in conjunction with the „Wholesale Brokerage‟ heading. The amount of brokerage bring earned by the wholesale Broker. This heading must only be used in conjunction with the „Retail Brokerage‟ heading. Any additional deductions in monetary amount or a percentage from premium due to insurers e.g. administration fees, sundry payments, etc. Any premium taxes and charges payable by the (re)insured in addition to the premium stated above, which are collected and/or administered by Insurers e.g. UK Insurance Premium Tax. Any premium taxes and charges payable by Insurers must be shown in the Fiscal & Regulatory section. If no taxes payable, state none – do not leaving heading blank. Details of procedures for storage of data, documents and other information in relation to Data Protection Act.

(CONDITIONS PRECEDENT):

(SUBJECTIVITIES):

SEVERAL LIABILITY: CHOICE OF LAW & JURISDICTION:

PREMIUM: OR RATE:

PAYMENT TERMS: FEE PAYABLE BY CLIENT? (TOTAL BROKERAGE) (RETAIL BROKERAGE) (WHOLESALE BROKERAGE) OTHER DEDUCTIONS FROM PREMIUM: TAXES PAYABLE BY (RE) INSURED AND ADMINISTERED BY UNDERWRITERS: (RECORDING, TRANSMITTING & STORING INFORMATION):

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APPENDIX A – Slip headings defined
HEADING SIGNING PROVISIONS: DEFINITION Slips must contain a signing provision. Model signing provisions are contained in Appendix G to implement the signing principles already agreed for contract certainty.

Additional Risk Details Headings – Direct & Facultative R/I (Non-Marine)
HEADING (FORM): INTEREST: SITUATION: DEFINITION The NMA reference or other identification of the policy jacket. The wording or clauses should not be shown here, these should be included in the Conditions heading. Interest or subject matter insured or nature of liability. Situation, territorial limits or location.

Additional Risk Details Headings – Direct & Facultative R/I (Marine)
HEADING (FORM): VESSELS: OR CONVEYANCE: INTEREST: TRADING: DEFINITION The MAR reference or other identification of the policy jacket. The wording or clauses should not be shown here, these should be included in the „Conditions‟ heading. Name of vessel/conveyance. Interest or subject matter insured or nature of liability. Territorial or trading limits or trading warranties.

Additional Risk Details Headings – Excess of Loss Treaty (Non-Marine / Aviation)
HEADING (FORM) CLASS OF BUSINESS & ANY EXCLUSIONS: TERRITORIAL SCOPE: REINSTATEMENT PROVISIONS: CO-REINSURANCE WARRANTY: LOSS RESERVE & INTEREST: DEFINITION The J(a) reference or other identification of the policy jacket. The wording or clauses should not be shown here, these should be included in the „Conditions‟ heading. The Classes of business covered by the treaty followed by any specific exclusions. The Territorial Scope. Provisions for any Reinstatement, including Limit and Additional Premium applicable. Any Co-Reinsurance warranty to be specified Any loss reserve and applicable interest thereon to be specified.

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APPENDIX A – Slip headings defined Additional Risk Details Headings – Excess of Loss Treaty (Marine)
HEADING INTEREST & ANY EXCLUSIONS: REINSTATEMENT PROVISIONS: FORM: DEFINITION The interest and any exclusions. The nature of the interest must appear first followed by specific exclusions, so that it is immediately apparent which is which. Provisions for any reinstatement including limit and additional premium applicable. The MAR reference or other identification of the policy jacket. The wording or clauses should not be shown here, these should be included in the „Conditions‟ heading.

Additional Risk Details Headings – Proportional Treaty (Non-Marine / Aviation)
HEADING FORM CLASS OF BUSINESS & ANY EXCLUSIONS: TERRITORIAL SCOPE: COMMISSION OR OVERRIDING COMMISSION: PROFIT COMMISSION: DEFINITION The J(a) reference or other identification of the policy jacket. The wording or clauses should not be shown here, these should be included in the „Conditions‟ heading. Classes of Business must appear first followed by the exclusions separated by a space, so that it is immediately apparent which is which. The territorial scope. The percentage amount of commission needs to be inserted but where it is other than this a clear indication is required. The percentage amount of profit commission allowed and the percentage for reinsurers‟ expenses must be entered first under this heading. Following this must be provision, if any, for deficit carry forwards and the basis of calculation. If there is no deficit carry forward this must be made clear. If the interest is not a per annum basis this must be stated. If the interest is not a per annum basis this must be stated. For original portfolios between the reassured and reinsurers. Premium and / or loss portfolios to be assumed or returned must be entered showing the basis of calculation e.g. in the case of premiums whether it is the actual unearned or a percentage of the previous twelve months written premiums etc, and in the case of losses whether it is the actual outstanding losses or a percentage thereof. It must also be shown whether the premium portfolio is subject to deduction of commission etc and whether it is to be treated as cash or reserve. Insert amount. Indicate the periods at which accounts are to be rendered and also any provisions for bordereaux or other documents necessary to show on a slip.

PREMIUM RESERVE & INTEREST: LOSS RESERVE & INTEREST: PORTFOLIO:

CASH LOSS LIMIT: ACCOUNTS:

Additional Risk Details Headings – Proportional Treaty (Marine)
HEADING INTEREST & ANY EXCLUSIONS: PREMIUM RESERVE & INTEREST: LOSS RESERVES & INTEREST: CASH LOSS LIMIT: BORDEREAUX: DEFINITION The interest insured and the exclusions must be shown but the nature of the account must appear first followed by the exclusions, separated by a space, so that it is immediately apparent which is which. If the interest is not a per annum basis this must be stated. If interest is not on a per annum basis this must be stated. The amount and proportion of the treaty to which it is applicable. Indicate the intervals at which provisional or definite bordereaux are to be rendered.

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APPENDIX A – Slip headings defined
HEADING ACCOUNTS: COMMISSION: OR OVERRIDING COMMISSION: PROFIT COMMISSION: DEFINITION Indicate the period at which accounts to be rendered. The percentage amount of commission needs to be inserted but where it is other than this a clear indication is required. The percentage amount of profit commission allowed and the percentage for reinsurers‟ expenses must first be entered. Following this must be provision, if any, for deficit carry forwards and the basis of calculation. If there is no deficit carry forward this must be made clear.

Subscription Agreement – All Classes
SLIP HEADING SLIP LEADER: DEFINITION State who is the Slip Leader. If this is known when the slip is produced it must be added by the Broker. If it is not known when the slip is produced the Slip Leader inserts their company/ syndicate name and number 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 slip it is possible to annotate the right hand side of the slip with the headings OVERALL SLIP LEADER and LONDON MARKET SLIP LEADER. In such cases subsequent provisions will need to be specific in the Subscription Agreement with regard to any leading underwriter agreements or slip leader provisions. The Settlement Due Date refers to the date (day, month and year) by which the Insurers wish to receive their premium or the due date of the 1st instalment if the premium is on a deferred basis. Please note that the date shown here is a term of trade and not a policy condition such as a “Premium payment warranty” or a “Premium payment condition”. These must continue to be shown under the Payment terms heading in the Risk Details section. The location of the SDD in this section of the slip does not confer any change in legal effect of the SDD or the implications of noncompliance. The basis on which subscribing (re)insurers written lines are applied to 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) Specify the number of days added to the client due dates of subsequent instalments. Please note that this heading is only mandatory where premium is to be paid via the bureau deferred scheme. Specify the number of days after expiry Insurers expect the final adjustment of premium (if any) to be paid. State those Insurers, other than the Slip Leader, who will agree contract changes on behalf of the subscribing Insurers in accordance with the terms agreed below. This must not include those Insurers who wish to agree contract changes on their own behalf. N.B. Care must be taken to avoid conflict with leading underwriter agreements. This heading must therefore only be used when the GUA is being utilised. Specify any leading underwriter agreement that applies, e.g. NMA, LUAMC, GUA and applicable class of business schedule(s) etc. For classes of business where it is market practice, or where specified in the GUA schedule, to list a copy of agreed endorsements to the following market, the method/media should be specified here e.g. email, link to repositories, etc.

SETTLEMENT DUE DATE:

BASIS OF WRITTEN LINES:

(DEFERRED PREMIUM PERIOD OF CREDIT): (ADJUSTMENT PREMIUM PERIOD OF CREDIT): (OTHER AGREEMENT PARTIES FOR CONTRACT CHANGES, IF ANY): BASIS OF AGREEMENT TO CONTRACT CHANGES:

Page 15 of 44

APPENDIX A – Slip headings defined
SLIP HEADING DOCUMENT PRODUCTION: DEFINITION The type(s) of evidence of cover to be produced, who produces it and any particular requirements e.g. any requirement for an insurer approved policy. The appropriate evidence of cover including security must be issued with 30 days of inception. It is a requirement of contract certainty that 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 Placing Slip  Evidence of Cover to be provided by "Broker company name" in the form of a Brokers Insurance Document  Evidence of Cover to be issued by "Broker company name" in the form of a certificate (binding authority declarations only) Further guidance regarding insurer approved policies will be issued shortly on this subject. Identification of the claims agreement parties e.g. Slip Leader, plus the first IUA company and Xchanging Claims Services. N.B. The 2006 Lloyd‟s Claims Scheme requires XCS to agree all claims where there is more than one subscribing managing agent (Lloyd‟s), other than in the case of special category claims where the second Insurer may optionally act on their own and XCS acts on behalf of the remaining following syndicates. Specify the basis of the claims procedure(s) such as the Lloyd‟s 2006 claims scheme for Lloyd‟s participation and IUA claims agreement practices for company market participation on slip. All claims related information with the exception of identification of agreement parties and the basis of claims agreement must be included here. Clarification is required as to which Insurers will use CLASS and the use of email and/or access to repositories. If any of the claims agreement parties specified above have delegated their claims processing and agreement to any other party this must be specified here including any limits that may apply, e.g. all claims less than GBP 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 claims agreement parties must incorporate details as necessary. The party(ies) responsible for the collection of experts fees. There are six options available under the experts fees collection arrangements. These options can be found in Appendix D. N.B. this heading is optional on Reinsurance business. Any specific arrangements relating to the bureaux including administrative arrangements for premium settlement, delinked accounting, and policy signing or basis of policy agreement clauses. To be used as appropriate to record any specific provisions relating to insurers outside of the bureau.

CLAIMS AGREEMENT PARTIES

BASIS OF CLAIMS AGREEMENT: CLAIMS ADMINISTRATION:

RULES AND EXTENT OF ANY OTHER DELEGATED CLAIMS AUTHORITY: (EXPERT(S) FEES COLLECTION)

BUREAUX ARRANGEMENTS: (NON-BUREAUX ARRANGEMENTS):

Page 16 of 44

APPENDIX A – Slip headings defined Information – All Classes
Slip Heading INFORMATION: DEFINITION Details of any information provided to Insurers to support the assessment of the risk at the time of placement. Where the information is appropriate for inclusion in the slip it should be shown here. Where the size or format of the information is not suitable for inclusion it should be clearly referenced in this section and should be made available to all Insurers during placing.

Fiscal & Regulatory – All Classes
Slip Heading TAX PAYABLE BY UNDERWRITER(S): DEFINITION Any premium taxes and charges payable by Insurers from the premium paid to them e.g. Australian Income Tax. Any premium taxes and charges payable by the insured in addition to the premium which are collected or administered by Insurers must be shown in the Taxes Payable by (Re) Insured and Administered by Underwriters heading of the Risk Details. Where the demand for the insurance comes from. This equates to the country of origin of the (re)insured. Details of the overseas intermediary must be completed here where one exists. Where more than one exists this should show the next intermediary Broker in the placing chain. If no overseas agents are involved then this heading should specify “Direct Insured”. The name, surplus lines licence number and state of the US intermediary which is responsible for completing the Surplus lines filing, if any. The full address may optionally be shown. Refer to Lloyd‟s Bulletin Y3768. The state in which the filings are made needs to be specified. This heading must be completed on all slips that have a US Classification of US Surplus Lines. The country, state or province to which a risk will be reported against for regulatory reporting under Lloyd‟s licences. The country of risk is as defined by the country for regulatory or fiscal reporting purposes, as per definitions in the Lloyd‟s country manuals. To be entered if premium is in US Dollars, irrespective of risk location. Only the following values should be entered:  US Surplus Lines  US Reinsurance  Illinois licensed  Kentucky licensed  US Virgin Isles licensed  Non Regulated  Various To be included only where risk is US Reinsurance. The Lloyd‟s risk code(s) allocated by the first participating Lloyd‟s insurer specifying how the premium is to be allocated and/or details of how the Leading Company would like the premium to be split for signing purposes This heading is only required on contracts written by Lloyd‟s syndicates where the period exceeds 18 months. To be included on all business. There are 6 possible options, please refer to the Appendix C of this document for further information.

COUNTRY OF ORIGIN OVERSEAS BROKER:

(SURPLUS LINE BROKER): (STATE OF FILING): (LICENCE INFORMATION):

(US CLASSIFICATION):

(NAIC CODES): ALLOCATION OF PREMIUM TO CODING: (ALLOCATION OF PREMIUM TO YEAR OF ACCOUNT): FSA CLIENT CLASSIFICATION:

Page 17 of 44

APPENDIX A – Slip headings defined
(IS THE BUSINESS SUBJECT TO THE DISTANCE MARKETING DIRECTIVE?): This heading must be included if the Client Classification heading specifies Retail or Retail Exempt. If the Client Classification heading specifies Commercial, Large Risk, Group Risks or Reinsurance it must be omitted. Where it appears the only applicable answers are Yes or No.

Page 18 of 44

APPENDIX B - Example of compliant non-marine direct slip
RISK DETAILS

SLIP STRUCTURE UNIQUE MARKET This reference can be incorporated as a separate heading or as a header on each page REFERENCE:

SLIP EXAMPLE UNIQUE MARKET B012308540HG78 REFERENCE:

of the slip. 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. This heading is applicable to all declarations off line slips, marine open cargo covers and limited binding authorities that are shown to insurers. This heading should specify the unique market reference to which the declaration in question attaches This heading must incorporate details of the type of Contract e.g. Marine Hull. The NMA reference or other identification of the policy jacket. The wording or clauses should not be shown here, these should be included in the Conditions heading. The (re)insured‟s name, and where appropriate their address and/or business.

ATTACHING TO DELEGATED UNDERWRITING CONTRACT NUMBER: TYPE: FORM:

TYPE: FORM:

Non Marine Generic Example Open Market Slip

J (NMA 2420)

**INSURED:

INSURED:

XYZ Ltd 123 Wickley Road London United Kingdom L20 1MP

Page 19 of 44

APPENDIX B - Example of compliant non-marine direct slip
SLIP STRUCTURE **PERIOD:
The inception date and time of day, expiry date and time of day as well as the applicable time zone. As an alternative to specifying both times of day it is acceptable to specify both days inclusive, although the applicable time zone is still required. Where the risk is for a continuous contract the Anniversary date is to be included in place of the Expiry date, please note that the applicable time zone is still required. However for risks 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. On Proportional treaty business where the heading Period and Cancellation Provisions is used cancellation provisions, if any, must be stated including reference to what happens to business in force at cancellation, if applicable, and whether there is any option for either party in this respect. On Risks Attaching During contracts it is acceptable to state “any time zone”.

SLIP EXAMPLE PERIOD:
From: 1 July 2006 GMT th To: 30 June 2007 GMT Both days inclusive.
st

INTEREST:

Interest or subject matter insured or nature of liability. Sum insured or reinsured or indemnity or monetary limits.

INTEREST:

(Non-marine generic example).

**SUM INSURED:

SUM INSURED:

GBP XX,XXX,XXX

Page 20 of 44

APPENDIX B - Example of compliant non-marine direct slip
SLIP STRUCTURE ORDER HEREON:
The heading Order hereon must detail the slip closings i.e. whether the signed lines are percentages of the whole or percentages of the slips 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 H for guidance on correct completion. Situation, territorial limits or location.

SLIP EXAMPLE ORDER HEREON:
100% of 100%.

SITUATION:

SITUATION:

123 Wickley Road London United Kingdom L20 1MP XXX wording as attached. LSW 1175 Nuclear/Chemical/ Biological terrorism Exclusion clause LSW 1145 Lloyd‟s alternative disputes clause

CONDITIONS:

Identification, qualification or variation in coverage including the wording, clauses, conditions and amendments to any clauses in basic form. The slip must reference or attach all registered wordings and registered clauses. All non-registered wordings and non –registered Clauses must be stated in full and attached in full. An optional heading where any notices other than Several Liability Notice must be recorded. E.g. Lloyd‟s privacy statement LSW 1135 B. Any express warranties that apply to the contract, over and above any that may be incorporated in the Policy Form or implied warranties from legislation such as the Marine Insurance Act 1906, including the consequences of non-compliance. If there are no express warranties this heading would not be included.

CONDITIONS:

NOTICES:

NOTICES:

Lloyd's Privacy Statement LSW1135B

EXPRESS WARRANTIES:

EXPRESS WARRANTIES:

(To be inserted if any).

Page 21 of 44

APPENDIX B - Example of compliant non-marine direct slip
SLIP STRUCTURE CONDITIONS PRECEDENT:
Any conditions precedent that apply to the contract, over and above any that may be incorporated in the Policy Form or legislation, including the consequences of non-compliance. If there are no conditions precedent this heading would not be included.

SLIP EXAMPLE CONDITIONS PRECEDENT:
(To be inserted if any).

SUBJECTIVITIES:

A slip can include subjectivities for example an outstanding survey requirement. Subjectivities must be imposed within the slip in the Risk Details section and must not be shown in the Security Details section against Insurers‟ lines. All subjectivities should set out the condition/action that needs to occur, by whom and to what standard; the applicable timescale within which the condition is to met; the terms which are to apply until the condition is met; and the consequences which are to follow if the condition is not met. If a subjectivity is outstanding at inception then it must be stated as a fully claused condition of the coverage given in the slip and relevant evidence of cover issued.

SUBJECTIVITIES:

(To be inserted if any). .

Page 22 of 44

APPENDIX B - Example of compliant non-marine direct slip
SLIP STRUCTURE SEVERAL LIABILITY:
The several liability notice that applies. This must be either the insurance or reinsurance version of LSW1001, and must be included in full on all slips to ensure the (re)insured is fully aware of the notice.

SLIP EXAMPLE SEVERAL LIABILITY:
The subscribing insurers obligations under contracts of insurance to which they 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.

CHOICE OF LAW & JURISDICTION:

**PREMIUM:

The court that will have jurisdiction in the event of a dispute between insured and insurers and the law that will apply. Further Lloyd‟s information on this heading is available in Lloyd‟s bulletin Y3406 and Y3327 and for LMA members letter LTM04-056-WFR. The premium to be paid by the insured. Premiums in respect of War coverage must be identified separately to premiums in respect of other insured perils. Any premium instalment information must be shown here and not under the Payment Terms heading. The Premium Payment Terms applied to the contract by the Slip Leader, including Premium Payment Clauses, Warranties and Conditions. The Settlement Due Date must be shown under the Settlement Due Date heading and not here.

CHOICE OF LAW & JURISDICTION:

This insurance shall be governed by and construed in accordance with the law of England and Wales and each party agrees to submit to the exclusive jurisdiction of the Courts of England and Wales. GBP XX,XXX

PREMIUM:

PAYMENT TERMS:

PAYMENT TERMS:

60 day premium payment condition – LSW3000.

It is a matter for Broker and insurer to agree whether it is appropriate to show the total brokerage or to split brokerage under separate headings, e.g. retail and wholesale brokerage (as shown below)

It is a matter for Broker and insurer to agree whether it is appropriate to show the total brokerage or to split brokerage under separate headings, e.g. retail and wholesale brokerage (as shown below)

Page 23 of 44

APPENDIX B - Example of compliant non-marine direct slip
SLIP STRUCTURE FEE PAYABLE BY CLIENT? (TOTAL BROKERAGE)
The Broker should specify whether the client is paying a fee to them. This should be a simple “Yes” or “No” answer. The total brokerage allowance.

SLIP EXAMPLE FEE PAYABLE BY CLIENT? TOTAL BROKERAGE
No

XX%

OR
FEE PAYABLE BY CLIENT? (RETAIL BROKERAGE)
The Broker should specify whether the client is paying a fee to them. This should be a simple “Yes” or “No” answer. The amount of brokerage being earned by the retail Broker. This heading must only be used in conjunction with the „Wholesale Brokerage‟ heading. The amount of brokerage bring earned by the wholesale Broker. This heading must only be used in conjunction with the „Retail Brokerage‟ heading.

OR
FEE PAYABLE BY CLIENT? RETAIL BROKERAGE
No

Y%

(WHOLESALE BROKERAGE)

WHOLESALE BROKERAGE

Z%

OR Retail and wholesale brokerage may be combined into one heading and any subscription market brokerage shown as a separate field
OTHER DEDUCTIONS FROM PREMIUM:
Any additional deductions from premium e.g. administration fees, sundry payments, etc.

OR Retail and wholesale brokerage may be combined into one heading and any subscription market brokerage shown as a separate field
OTHER DEDUCTIONS FROM PREMIUM:
None.

Page 24 of 44

APPENDIX B - Example of compliant non-marine direct slip
SLIP STRUCTURE **TAXES PAYABLE BY INSURED AND ADMINISTERED BY UNDERWRITERS:
Any premium taxes and charges payable by the insured in addition to the premium stated above, which are collected and/or administered by Insurers e.g. UK Insurance Premium Tax. Any premium taxes and charges payable by Insurers must be shown in the Fiscal & Regulatory section. If no taxes payable, state none – do not leaving heading blank Details of procedures for storage of data, documents and other information in relation to Data Protection Act.

SLIP EXAMPLE
5% UK Insurance Premium Tax on Gross TAXES PAYABLE Premium. BY INSURED AND ADMINISTERED BY UNDERWRITERS:

RECORDING, TRANSMITTING & STORING INFORMATION:

RECORDING, TRANSMITTING & STORING INFORMATION:

Where the Broker maintains risk and claim data/information/documents the Broker may hold data/information/documents electronically.

Page 25 of 44

APPENDIX B - Example of compliant non-marine direct slip
SLIP STRUCTURE SIGNING PROVISIONS:
Slips must contain a signing provision. Model signing provisions are contained in Appendix G to implement the signing principles already agreed for contract certainty.

SLIP EXAMPLE SIGNING PROVISIONS: In the event that the written lines hereon exceed 100% of the order, any lines written “to stand” will be allocated in full and all other lines will be signed down in equal proportions so that the aggregate signed lines are equal to 100% of the order without further agreement of any of the (re)insurers. However: a) in the event that the placement of the order is not completed by the commencement date of the period of insurance then all lines written by that date will be signed in full; b) the signed lines resulting from the application of the above provisions can be varied, before or after the commencement date of the period of insurance, by the documented agreement of the (re)insured and all (re)insurers whose lines are to be varied. The variation to the contracts will take effect only when all such (re)insurers have agreed, with the resulting variation in signed lines commencing from the date set out in that agreement.

Page 26 of 44

APPENDIX B - Example of compliant non-marine direct slip

SUBSCRIPTION AGREEMENT

SLIP STRUCTURE
SLIP LEADER:
State who is the Slip Leader. If this is known when the slip is produced it must be added by the Broker. If it is not known when the slip is produced the Slip Leader inserts their company/ syndicate name and number 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 slip it is possible to annotate the right hand side of the slip with the headings OVERALL SLIP LEADER and LONDON MARKET SLIP LEADER. In such cases subsequent provisions will need to be specific in the Subscription Agreement with regard to any leading underwriter agreements or slip leader provisions. The date (day, month and year) by which the Insurers wish to receive their premium or the due date of the 1st instalment if the premium is on a deferred basis. Please note that the date shown here is a term of trade and not a policy condition such as a not a “Premium payment warranty” or a “Premium payment condition”. These must continue to be shown under the “Payment terms” heading in the Risk Details section. The location of the SDD in this section of the slip does not confer any change in legal effect of the SDD or the implications of noncompliance.

SLIP EXAMPLE
SLIP LEADER:
ABC Syndicate

SETTLEMENT DUE DATE:

SETTLEMENT DUE DATE:

1 September 2006

st

Page 27 of 44

APPENDIX B - Example of compliant non-marine direct slip SLIP STRUCTURE
BASIS OF WRITTEN LINES:
The basis on which subscribing (re)insurers written lines are applied to 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) Specify the number of days added to the client due dates of subsequent instalments. Please note that this heading is only mandatory where premium is to be paid via the bureau deferred scheme. Specify the number of days after expiry Insurers expect the final adjustment of premium (if any) to be paid.

SLIP EXAMPLE
BASIS OF WRITTEN LINES:
Percentage of Whole

DEFERRED PREMIUM PERIOD OF CREDIT:

DEFERRED PREMIUM PERIOD OF CREDIT:

30 Days

ADJUSTMENT PREMIUM PERIOD OF CREDIT:

ADJUSTMENT PREMIUM PERIOD OF CREDIT:

(To be inserted if any)

Page 28 of 44

APPENDIX B - Example of compliant non-marine direct slip SLIP STRUCTURE
OTHER AGREEMENT PARTIES FOR CONTRACT CHANGES, IF ANY:
State those Insurers, other than the Slip Leader, who will agree contract changes on behalf of the subscribing Insurers in accordance with the terms agreed below. This must not include those Insurers who wish to agree contract changes on their own behalf. N.B. Care must be taken to avoid conflict with leading underwriter agreements. This heading must therefore only be used when the GUA is being utilised.

SLIP EXAMPLE
OTHER AGREEMENT PARTIES FOR CONTRACT CHANGES, IF ANY:
GHI Company Ltd

BASIS OF AGREEMENT TO CONTRACT CHANGES:

Specify any leading underwriter agreement that applies, e.g. NMA, LUAMC, GUA and applicable class of business schedule(s) etc. For classes of business where it is market practice, or where specified in the GUA schedule, to list a copy of agreed endorsements to the following market, the method/media should be specified here e.g. email, link to repositories, etc.

BASIS OF AGREEMENT TO CONTRACT CHANGES:

GUA (October 2001) with Non-Marine Schedule (October 2001).

Page 29 of 44

APPENDIX B - Example of compliant non-marine direct slip SLIP STRUCTURE
DOCUMENT PRODUCTION:
The type(s) of evidence of cover to be produced, who produces it, and any particular requirements e.g. any requirement for an insurer approved policy. The appropriate evidence of cover including details of security issued with 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 copy of this Placing Slip  Evidence of Cover to be provided by "Broker company name" in the form of a Brokers Insurance Document  Evidence of Cover to be issued by "Broker company name" in the form of a certificate (binding authority declarations only)

SLIP EXAMPLE
DOCUMENT PRODUCTION:
Evidence of Cover to be provided by XYZ Insurance Brokers Ltd in the form of a Brokers Insurance Document. In addition an insurance policy authorised by the insurer will be issued. [please note further guidance will be issued on this topic in due course]

CLAIMS AGREEMENT PARTIES:

Identification of the claims agreement parties e.g. Slip Leader, plus the first IUA company and Xchanging Claims Services.

CLAIMS AGREEMENT PARTIES:

Claims to be agreed by the Slip Leader and: I. the first Lloyd's syndicate in the event that the Slip Leader is a IUA company II. the first 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 30 of 44

APPENDIX B - Example of compliant non-marine direct slip SLIP STRUCTURE
BASIS OF CLAIMS AGREEMENT:
Specify the basis of the claims procedure(s) such as the Lloyd‟s 2006 claims scheme for Lloyd‟s participation and IUA claims agreement practices for company market participation on slip. All claims related information with the exception of identification of agreement parties and the basis of claims agreement must be included here. Clarification is required as to which Insurers will use CLASS and the use of email and/or access to repositories. If any of the claims agreement parties specified above have delegated their claims processing and agreement to any other party this must be specified here including any limits that may apply, e.g. all claims less than GBP 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.

SLIP EXAMPLE
BASIS OF CLAIMS AGREEMENT:
Claims to be managed in accordance with the Lloyd‟s 2006 Claims Scheme and IUA claims agreement practices.

CLAIMS ADMINISTRATION:

CLAIMS ADMINISTRATION:

Broker to enter claim advices into CLASS. All company market bureaux insurer(s) to use CLASS for claims agreement.

RULES AND EXTENT OF ANY OTHER DELEGATED CLAIMS AUTHORITY:

RULES AND EXTENT OF ANY OTHER DELEGATED CLAIMS AUTHORITY:

ABC Syndicate delegates the management of all claims under GBP XX,XXX to Xchanging Claims Services.

EXPERT(S) FEES COLLECTION:

The party(ies) responsible for the collection of experts fees. There are six options available under the experts fees collection arrangements. These options can be found in Appendix D. N.B. this heading is optional on reinsurance business.

EXPERT(S) FEES COLLECTION:

Xchanging Insure Services to collect fees for all slip security, including overseas.

Page 31 of 44

APPENDIX B - Example of compliant non-marine direct slip SLIP STRUCTURE
BUREAUX ARRANGEMENTS:
Any specific arrangements relating to the bureaux including administrative arrangements for premium settlement, delinked accounting, and policy signing or basis of policy agreement clauses. To be used as appropriate to record any specific provisions relating to insurers outside of the bureau.

SLIP EXAMPLE
BUREAUX ARRANGEMENTS:
Delinked accounts to be presented by Broker to Xchanging Ins-sure Services.

NON – BUREAUX ARRANGEMENTS:

NON – BUREAUX ARRANGEMENTS:

(To be inserted if any).

Page 32 of 44

APPENDIX B - Example of compliant non-marine direct slip
INFORMATION
Details of any information provided to Insurers to support the assessment of the risk at the time of placement. Where the information is appropriate for inclusion in the slip it should be shown here. Where the size or format of the information is not suitable for inclusion it should be clearly referenced from this section and must be made available to all Insurers during placing. Loss History as advised to Broker at 1 June 2006: Year 2001/02: 2002/03: 2003/04: 2004/05: 2005/06: Loss Amount Nil Nil GBP 3,000 Nil GBP 8,000,000
st st

Loss Event None None Lightning None Explosion in fuel pipe

Presentation dated 1 June 2006 confirmed that sprinklers fully operational.

Page 33 of 44

APPENDIX B - Example of compliant non-marine direct slip

FISCAL AND REGULATORY

SLIP STRUCTURE
TAX PAYABLE BY UNDERWRITER(S): Any premium taxes and charges payable by Insurers from the premium paid to them e.g. Australian Income Tax. Any premium taxes and charges payable by the Insured in addition to the premium which are collected and/or administered by Insurers should be shown in the Taxes Payable by (Re) Insured and administered by Underwriters heading of the Risk Details. Where the demand for the insurance comes from. This equates to the country of origin of the (re) insured. Details of the overseas intermediary must be completed here where one exists. Where more than one exists this should show the next intermediary Broker in the placing chain. If no overseas agents are involved then this heading should specify “Direct Insured”. The name, surplus lines licence number and state of the US intermediary which is responsible for completing the Surplus lines filing, if any. The full address may optionally be shown. Refer to Lloyd‟s Bulletin Y3768. The state in which the filings are made needs to be specified. This is usually the state of domicile of the insured. Must be present on all slips that have a US Classification of US Surplus Lines. TAX PAYABLE BY UNDERWRITER(S):

SLIP EXAMPLE
None.

COUNTRY OF ORIGIN:

COUNTRY OF ORIGIN:

United Kingdom

OVERSEAS BROKER:

OVERSEAS BROKER:

Direct Insured

SURPLUS LINES BROKER:

STATE OF FILING:

Page 34 of 44

APPENDIX B - Example of compliant non-marine direct slip SLIP STRUCTURE
LICENCE INFORMATION: The country, state or province to which a risk will be reported against for regulatory reporting under Lloyd‟s licences. The country of risk is as defined by the country for regulatory or fiscal reporting purposes, as per definitions in the Lloyd‟s country manuals. To be entered if premium is in US Dollars, irrespective of risk location. Only the following values should be entered:  US Surplus Lines  US Reinsurance  Illinois licensed  Kentucky licensed  US Virgin Isles licensed  Non Regulated  Various To be included only risk is US Reinsurance The Lloyd‟s risk code(s) allocated by the first participating Lloyd‟s insurer specifying how the premium is to be allocated and/or details of how the Leading Company would like the premium to be split for signing purposes. This heading is only required for contracts written by Lloyd‟s syndicates where the period exceeds 18 months. To be included on all business. There are 6 possible options, please refer to the Appendix C of this document for further information. This heading must be included if the Client Classification heading specifies Retail or Retail Exempt. If the Client Classification heading specifies Commercial, Large Risk, Group Risks or Reinsurance it must be omitted. Where it appears the only applicable answers are Yes or No. ALLOCATION OF PREMIUM TO CODING: GS

SLIP EXAMPLE

US CLASSIFICATION:

NAIC CODES: ALLOCATION OF PREMIUM TO CODING:

ALLOCATION OF PREMIUM TO YEAR OF ACCOUNT: FSA CLIENT CLASSIFICATION: IS BUSINESS SUBJECT TO DISTANCE MARKETING DIRECTIVE RULES?:

ALLOCATION OF PREMIUM TO YEAR OF ACCOUNT: FSA CLIENT CLASSIFICATION:

(To be inserted if any). Commercial.

Page 35 of 44

APPENDIX C- FSA Client Classification

Classification Retail

Retail Exempt

Commercial Large Risk

Group Risks

Reinsurance

FSA Classification description 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. 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. Dealing with a commercial customer. 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. 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 worldwide.

Please note if the FSA Client Classification heading is completed Retail or Retail Exempt the heading Is Business subject to Distance Marketing Directive Rules? must be included and answered either Yes or No.

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APPENDIX D- 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 agreed as one of the market reforms. This scheme allows affected parties to choose a collection process best suited to the particular circumstances of the individual policy. The Market Reform Slip 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 option(s) must be agreed 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. 2. 3. 4. 5. A named service provider to collect London market share only. A named service provider to collect all slip security, including overseas. A named service provider to collect only overseas percentages. Broker to collect fees. 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 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 relates to fee collection only in respect of just London or just overseas markets (Options 1 & 3) and there are subscribing insurers from both markets then more than one option must be specified.

Scope
The options for fee collection recorded in this document may be used with all London market slips. If a Market Reform Slip is used then the slip heading will be available to record the necessary information. If the slip is not produced to the above (market reform) structure then it is recommended that a slip heading of Expert(s) Fees Collection be inserted to record this information. 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.

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APPENDIX E: Line conditions
The Contract Certainty Code of Practice requires insurers to phase out the practice of applying stamp 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: Stamp conditions should be phased out during the implementation of the Market Reform Slip June 2006. 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 Wording to be agreed All signing instructions other than lines to stand REASON FOR PROHIBITION Contract certainty requires wordings to be agreed before the Insurer formally commits to the contract. All other signing instructions are imprecise and therefore ambiguous, e.g. X% to sign Y%.

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APPENDIX E: Line conditions
Table 2: Line Conditions provided for in either Risk Details or Subscription Agreement sections and not the Security Details section
LINE Condition All terms conditions, amendments, deletions, special acceptances and endorsements to be agreed Intended Effect The insurer wants to agree all endorsements, changes to terms and conditions and special acceptances, etc Guidance Contracts written with a GUA    The Slip Leader will see all endorsements as a matter of course. Agreement Parties specified under the heading OTHER AGREEEMENT PARTIES FOR CONTRACT CHANGES, IF ANY will see all Part 2 and Part 3 endorsements. Followers wishing to agree all endorsements for their own proportion should insert “XYZ insurer to agree all terms conditions, amendments, deletions and endorsements under the heading BASIS OF AGREEMENT TO CONTRACT CHANGES”.

Contracts without a GUA Insurers wishing to agree all endorsements for their own proportion should insert “XYZ insurer to agree all terms conditions, amendments, deletions and endorsements” under the heading BASIS OF AGREEMENT TO CONTRACT CHANGES. This is a premium payment term and should be clearly expressed in the Risk Details section under the Payment Terms heading.

Warranted premium payable within 60 days of inception

SDD 14/11/05

Condition in relation to the payment of the premium, warranting that it be paid within 60 days of inception. Notification of the expected premium payment date. Marine exclusion condition of loss, damage, liability or expense arising from war to a ship hull. A condition providing for XCS to agree claims on behalf of the slip leader. A condition ensuring that each Insurer is liable only for their amount of risk (Limited Liability). A condition mandating that a particular carrier wants to agree all claims.

The Settlement Due Date by which the Insurers wish to receive their premium or the due date of the 1st instalment if the premium is on a deferred basis should be stated under the SETTLEMENT DUE DATE heading in the Subscription Agreement section. This is a condition to the contract and must be stated under the Conditions heading in the Risk Details section.

Excluding Hull War

Claims Handling Authority delegated to XCS Each Insurer to the extent of several liability

The RULES AND EXTENT OF ANY OTHER DELEGATED CLAIMS AUTHORITY heading in the Subscription Agreement section provides for this claims handling arrangement.

The several liability notice LSW1001 must be stated under the SEVERAL LIABILITY heading in the Risk Details section to ensure that the insured is fully aware of the notice.

All claims to be agreed

Insurers wishing to agree all claims should insert their name under the CLAIMS AGREEMENT PARTIES heading in the Subscription Agreement section. N.B. – Lloyd‟s syndicates must be mindful of the terms of the Lloyd‟s Claims Scheme 2006 before adding their name as a Claims Agreement Party. Only the first participating Lloyd‟s insurer (and optionally the second in respect of special category claims) may agree claims.

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APPENDIX E: Line conditions
LINE Condition Notice of cancellation at anniversary date Intended Effect A provision commonly found in contracts of insurance for more than a year, and permits the insurer 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. Guidance N.B. Not permitted for use by Lloyd’s managing agents. If non-Lloyd‟s insurers wish to apply this provision then they must:  ensure the contract is continuous  not use abbreviations, e.g. NCAD, and ensure that the necessary elements are contained in a clearly worded condition  be satisfied that the provision has legal effect under the law specified under LAW & JURISDICTION heading  record this under the CONDITIONS heading

Table 3: Acceptable Line Conditions
LINE Condition Intended Effect REASON FOR RETENTION

Line to stand

Excluding Letters of Credit and Outstanding Claims Advances (and/or for incurred but not reported losses)

A condition to ensure that a line stays as it is written and is not signed down. A condition imposed by the carrier where they will not provide Letters of Credit and Outstanding Claims Advances.

A recognised and acceptable line condition.

Risk specific heading particular to reinsurance business and not catered for in the slip.

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APPENDIX F- Unique Market Reference Guidance
The UMR must be stated in the Risk Detail 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. 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. The UMR as a whole must be unique. This means that when a contract is renewed it cannot keep the same UMR. The UMR must not contain any spaces, hyphens, slashes or other punctuation. Only numbers 0-9 and letters A-Z may be used. 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.

(ii)

(iii) (iv) (v)

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.

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APPENDIX G - Model Signing Provisions Guidance
1.1 Background

1.1.1 The Signed Lines Guidance issued in December 2005 established the following signing principles:  Wherever possible, the [signing down] calculation method should be explicit on the submission, subject to client wishes, allowing the insurer to determine how their line will be calculated.  The Broker should obtain client instructions regarding signed lines prior to inception, wherever possible.  Any post-inception change(s) in signing must be agreed by all parties whose lines are to be varied. 1.1.2 Model Signing Provisions can assist with the implementation of these principles and help to provide certainty of signed lines at inception. This is important for clients, to confirm their security and for (re)insurers, to confirm their participation and commitment of capital. It also clearly establishes the proportion to be borne by each (re)insurer in the event of a loss. 1.1.3 The signing provisions contained in this guidance enable the signed lines for each contract to be clearly determined at the conclusion of placement. Any subsequent variation of these signed lines then requires the documented agreement of the (re)insured and all (re)insurers whose lines are to be varied. 1.1.4 It is recommended that every contract should contain a clause which sets out the signing provisions, to assist with certainty in this area. The Model Signing Provisions below have been reviewed by leading counsel. 1.1.5 There are two versions of the Model Signing Provisions; one without a disproportionate signing clause, and one that allows disproportionate signing before inception at the election of the (re)insured. The Broker can select the appropriate version to use on the slip, taking account of the (re)insured‟s requirements. The model clauses are not mandatory and (re)insureds, Brokers and (re)insurers may make additions, deletions or amendments. 1.2 (Re)insurer signing instructions

1.2.1 The Market Reform Group (MRG), supported by the opinion of leading counsel, recommends that the use of all insurer signing instructions other than “line to stand” should be discontinued. For example, the use of (re)insurer signing instructions such as X% to sign Y%” should be discontinued, as their meaning may be unclear and compromise contract certainty. 1.2.2 If the lines written by (re)insurers “to stand” should exceed 100% of the order, then opinion obtained from leading counsel suggests that the agreement of (re)insurers would be required to vary these lines. In the event of a disproportionate signing, priority should be given to any intended variation of lines written “to stand”.

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APPENDIX G - Model Signing Provisions Guidance
2. 2.1 Model Signing Provisions Without Disproportionate Signing

SIGNING PROVISIONS In the event that the written lines hereon exceed 100% of the order, any lines written “to stand” will be allocated in full and all other lines will be signed down in equal proportions so that the aggregate signed lines are equal to 100% of the order without further agreement of any of the (re)insurers. However: a) in the event that the placement of the order is not completed by the commencement date of the period of insurance then all lines written by that date will be signed in full; b) the signed lines resulting from the application of the above provisions can be varied, before or after the commencement date of the period of insurance, by the documented agreement of the (re)insured and all (re)insurers whose lines are to be varied. The variation to the contracts will take effect only when all such (re)insurers have agreed, with the resulting variation in signed lines commencing from the date set out in that agreement. 2.2 With Disproportionate Signing

SIGNING PROVISIONS In the event that the written lines hereon exceed 100% of the order, any lines written “to stand” will be allocated in full and all other lines will be signed down in equal proportions so that the aggregate signed lines are equal to 100% of the order without further agreement of any of the (re)insurers. However: a) in the event that the placement of the order is not completed by the commencement date of the period of insurance then all lines written by that date will be signed in full; b) the (re)insured may elect for the disproportionate signing of (re)insurers‟ lines, without further specific agreement of (re)insurers, providing that any such variation is made prior to the commencement date of the period of insurance, and that lines written “to stand” may not be varied without the documented agreement of those (re)insurers; c) the signed lines resulting from the application of the above provisions can be varied, before or after the commencement date of the period of insurance, by the documented agreement of the (re)insured and all (re)insurers whose lines are to be varied. The variation to the contracts will take effect only when all such (re)insurers have agreed, with the resulting variation in signed lines commencing from the date set out in that agreement.

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APPENDIX H - Model Signing Provisions Guidance
This appendix explains how orders must be expressed in the Market Reform Slip. Part of Order should not be used. CIRCUMSTANCES
EXAMPLE A – PERCENTAGE OF WHOLE Written Lines Client A gives the Broker a 100% order and they are the only Broker involved in the placement. EXAMPLE B – PERCENTAGE OF ORDER Client B gives the Broker a 50% order and decides to self insure the rest. EXAMPLE C – PART OF WHOLE Client C gives a Broker monetary order of GPB 100 where the total sum insured was GPB200. Lines are written as a monetary amount as part of the total sum insured. Signed lines are shown as part of the sum insured. Written Lines % Part Of Order Whole Order GBP 100 Closed for 50% of GBP 200 Written Lines

OLD PANEL ONE NOTATION
% Part Of Order Whole Order 100% Closed for 100%

MARKET REFORM SLIP NOTATION
ORDER HEREON: 100% of 100% BASIS OF WRITTEN LINES: Percentage of Whole

ORDER HEREON: 50% of 100% BASIS OF WRITTEN LINES: Percentage of order % Part Of Order Whole Order 50% Closed for 100% of 50%

ORDER HEREON: 50% of GPB200 BASIS OF WRITTEN LINES: Part of whole

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