1. Delegated Underwriting The new landscape
Paul Brady
17 June 2019
Getting delegated authority flowing
Transform
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2. The rise of the intangibles
The most valuable retailer owns no inventory
The leading media company creates no content
The largest movie house owns no cinemas
The largest phone company owns no telco infrastructure
The largest accommodation provider owns no property
The world’s largest taxi company owns no taxis
New JH slide

3. Managing General Agents
Our fastest growing channel
4,000
£10.4bn
32%
premium generated
Managing General Agents
of Lloyd’s premium

4. Ready for change
Identifying blockages in the delegated authority process
Onboarding - Duplicated due-diligence and inefficient reviews slow down applications, while first-time contracts often contain errors
Binding risk – The lack of an adequate policy management system can delay new delegated authorities in getting ready to trade
Reporting – Data is not standardised making it prone to error and harder to use and share in other parts of the process.
Auditing – MGAs and TPAs can be subjected to multiple time consuming audits and compliance queries

5. Driving sustainable business performance
The benefits of a fluid process
Quicker business decisions
Data entered only once
Digital processes
Cut down on duplication
Richer commercial insights
Lower cost of doing business
Faster claims payments
Oversight is appropriate to your business type
Better customer service
Enhancing your gold standard status

6. Speeding up the flow
Lloyd’s plans for a single, seamless delegated authority process
Onboarding - Applications are triaged and reviewed according to your business type. Due diligence checks are centralised and right-first- time contracts generated digitally.
Binding risk – MGAs use a free digital plaform to manage the full placement cycle in line with Lloyd’s market standards, allowing them to monitor progress at all times.
Reporting – Data is collected, centralised and shared with relevant parties in line with Lloyd’s approved standards – reducing errors and enabling validated data to be reused
Auditing – Lloyd’s coordinate and centralise audits and ongoing compliance meaning MGAs and TPAs only have to supply the information once

7. Introducing Chorus A new approach to delegated authority oversight
A new modern framework
Risk based
Greater flexibility to future proof
Remove barriers to new sustainable business
Consistent approach for MGAs & TPAs
Supported by Chorus
Replaces ATLAS and BAR
Centrally manages coverholder and TPA approvals and compliance
Register binding authority
Optional right-first-time contract creation tool
© Lloyd’s

8. Risk Based Oversight
Lloyd’s continues to approve coverholders (and now also delegated claims administrators) Test remains ‘suitability’ but Lloyd’s will apply a risk-based approach to assessing applications Applications can be approved automatically by the system Lloyd’s can now take into account capabilities and competencies of the managing agent
© Lloyd’s

9. New category of delegated authority for underwriting
Introduce new category for delegated authority to ‘such other person or class or category of persons as the Franchise Board may permit’
Flexible category allowing Lloyd’s to permit delegation to (1) pre-agreed categories of firms without Lloyd’s prior approval of the firm; or (2) on a case by case basis
Delegation must be in accordance with a ‘contact for delegated authority’ that complies with any requirements prescribed by Lloyd’s
Criteria for when delegation in this category is permissible to be prescribed by Lloyd’s
Initially will be limited to ‘Distributors’ and to facilitate internet trading
Registration of (1) all firms and (2) contracts of delegated authority in this category (ie all relationships with managing agents or coverholders (where sub-delegation))
Detailed requirements to be set out in Requirements and Code of Practice – Delegated Authority
© Lloyd’s

10. Sub-delegation
Replacing the strict prohibition against sub-delegation with a framework that allows risk-based controls
Byelaw allows sub-delegation in all cases where delegation is permitted
Managing agents will always be permitted to sub-delegate (under line slip/consortia arrangement)
Controls applied through Minimum Standards
Service company coverholders, like managing agents, have same full permission to sub-delegate
Lloyd’s will impose limits on sub-delegation by coverholders and in ‘distributor’ arrangements
Conditions imposed on approved coverholders to limit/prohibit sub-delegation
Requirements prohibiting sub-delegation in all cases for ‘distributor’ arrangements
In all cases, Lloyd’s will retain discretion as to whether to permit sub-delegation on a case by case basis
Controls on how to sub-delegate, where permitted, will be prescribed and best-practice guidance given (eg requirements for appropriate electronic systems)
© Lloyd’s

11. Delegated Claims Administrators (DCA)
Regime governing approval and registration of DCAs to mirror regime for coverholders
Byelaw imposes a rule against delegation of the determination of claims except as permitted by Lloyd’s
DCAs require prior Lloyd’s approval
Coverholders with claims handling authority dealt with as part of coverholder approval process
Criteria for suitability of DCAs mirrors coverholder suitability criteria
Conditions can be imposed limiting the classes, geographies, etc for which approval is given
Criteria for DCA contracts of delegation – set out in Requirements
Registration of (1) all DCAs and (2) contracts of delegated authority
Sub-delegation of DCA authority while allowed by Byelaw - in practice will rarely be considered appropriate and restricted in the Requirements
Existing DCAs to be ‘grandfathered’ in.
© Lloyd’s