market reform office with acord market reform contract (mrc) for binding authorities and lineslips...
TRANSCRIPT
Market Reform Office
with ACORDwith ACORD
Market Reform Contract (MRC)for Binding Authorities and Lineslips
Andy Brookes & Steve Hulm (MRO),
Paul Brady (Lloyd’s),
Mark Knight (LMBC), David Banks (Travelers)
3 April 2008
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Summary
Very little has changed!
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Contents
• Background
• MRC (Binding Authorities)
– Lloyd’s Bulletin (Y4133)
• MRC (Lineslips)
• Implementation Timescale & Actions
• Market Reform Contract Endorsement (MRCE)
• Future Plans & Actions for You
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Background
• Why change at all?
• MRC (Open Market)
• MRCE
• Combined Certificates & Several Liability
– Lloyd’s Bulletin Y4133
• Overall, close call but worth new version
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Lloyd’s Bulletin – Y4133
• Combined certificates – where proportion of security provided by non-Lloyd’s insurers (“mixed markets”)
• Prohibited until now in US (by Lloyd’s)
• Now reviewed (at request of market)
• Primary concern – to ensure Lloyd’s syndicates not liable for non-Lloyd’s participations
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Lloyd’s Bulletin – Y4133
• Bulletin (11 March 2008) sets out new procedures for combined certificates and new several liability clause (LMA5096)
• The use of US combined certificates is now possible (but not mandatory)
• Underwriters can choose if/where to adopt
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Lloyd’s Bulletin –Feedback/Queries
• Positive reaction – new business opportunities
• 100% Lloyd’s “joint certificates”
– Can use existing procedures (including LSW1001)
• Risk placed with binder and open market participations
– Coverholder is not authorised to issue a joint/combined certificate encompassing the open-market lines
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MRC (Binding Authorities) - What has NOT changed
• The Model wordings (LMA3018 etc.) have not changed
• In any way
• The Schedules (& hence Schedule templates on website) have not changed
• In any way (despite example)
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MRC (Binding Authorities) – Changes
• Where relevant, order of headings and sections amended in line with MRC (Open Market).
• Non-Schedule agreements section:
– Headings removed: Order Hereon, Brokerage, Other Deductions from Premium, Signing Provisions
– Heading renamed to: TAX PAYABLE BY THE INSURED AND ADMINISTERED BY INSURERS
• Information section:
– Unchanged
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MRC (Binding Authorities) – Changes
• Security Details section:
– Now includes: Order Hereon, Basis of Written Lines, Basis of Signed Lines, Signing Provisions
– Several Liability clause/heading not required within this section of MRC (BA)
• Subscription Agreement section:
– Heading removed: Basis of Written lines
– New conditional heading: Bureau Leader
– Headings re-ordered
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MRC (Binding Authorities) - Changes
• Fiscal and Regulatory section:
– Headings renamed: TAX PAYABLE BY INSURERS, ALLOCATION OF PREMIUM TO CODING
• New Broker Remuneration and Deductions section:
– Total Brokerage, Other Deductions from Premium
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MRC (Binding Authorities) – Several Liability• Y4133 has prompted a review of Several
Liability requirements, & it is now agreed that:
– MRC (Binder) does not require further Several Liability language, beyond that within the model wording and that to be used on each certificate (specified within the Schedule)
– The clause for each certificate may be LMA5096 (for Combined Certificates) or as current (such as LSW1001)
– Do not use LMA3333 on MRC (BA) or on certificates
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MRC (Lineslips) – Changes
• Where relevant, order of headings and sections amended in line with MRC (Open Market).
• Contract Details:
– Headings removed: Order Hereon, Several Liability of the Lineslip, Brokerage, Other Deductions from Premium, Signing Provisions
– Headings renamed to: TAX PAYABLE BY THE INSURED AND ADMINISTERED BY INSURERS FOR EACH INSURANCE BOUND, INSURER CONTRACT DOCUMENTATION FOR EACH INSURANCE BOUND
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MRC (Lineslips) – Changes
• Information section:
– Unchanged
• Security Details section:
– Now includes: Order Hereon, Basis of Written Lines, Basis of Signed Lines, Signing Provisions.
– Several Liability clause/heading not required within MRC (LS)
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MRC (Lineslips) - Changes
• Subscription Agreement section:
– Heading removed: Basis of Written lines
– New conditional heading: Bureau Leader
– Headings re-ordered
• Fiscal and Regulatory section:
– Headings renamed: TAX PAYABLE BY INSURERS, ALLOCATION OF PREMIUM TO CODING
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MRC (Lineslips) - Changes
• New Broker Remuneration and Deductions section:
– Total Brokerage, Other Deductions from Premium
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Implementation Timescale & Actions
• MRC (BA) and MRC (LS) published in March 2008
• They can be used immediately
• They are the London Market standard from 1 July 2008
• Placing of Binder and Lineslip Declarations & Off-slips unaffected
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MRCE for Binders and Lineslips
• The format to be used for endorsements to the Binder or Lineslip itself
• Replaces the honeycomb
• Comparable to MRCE (Open Market)
– With minor changes in terminology
• Published April 2008
• London Market Standard from 1 August/September 2008
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Future Plans
• Minor changes to MRC (Open Market) – Summer 2008
– Which may affect Lineslip Declarations
– Clarification only, no changes to headings
• No further changes currently planned for MRC (BA) or (LS)
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Actions for You
• Understand the changes
– Today’s session
– Documentation on website (MRC & MRCE)
– Lloyd’s Bulletin (Y4133)
• Disseminate the information
– To others within your organisation
• Make it happen!
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Links
• Lloyd’s Bulletin Y4133
http://www.bulletins.lloydsoflondon.com/bulletins/mktcirc.nsf/mktBulletins/Y4133/$file/Y4133.pdf
• MRC for Binders:
http://www.marketreform.co.uk/RD_P_S_Binders_guidance_pg1.htm
• MRC for Lineslips:
http://www.marketreform.co.uk/RD_P_S_Lineslip_guidance.htm
• Endorsements (MRCE) for Binders & Lineslips:
– Watch this space
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Contacts
LMBC: [email protected] 0207 397 0252
LMA: [email protected]
0207 327 3333
Lloyd’s: [email protected] 0207 327 6064
[email protected] 0207 327 5750
IUA: [email protected] 0207 617 4445
MRO: [email protected] 0207 327 5220
Market Reform Office
with ACORDwith ACORD
Questions for Panel?
Mark Knight (LMBC), David Banks (Travelers),
Paul Brady (Lloyd’s), Steve Hulm (MRO)
3 April 2008