LMP Slip Guidelines for
Binding Authority
Agreements
16th September 2004
LMP SLIP GUIDELINES FOR BINDING AUTHORITY BUSINESS
Background
The LMP Slip Guidelines (published November 2003) provide the framework for
clarity and certainty of contract for open market business placed within the London
Market. Lloyd’s mandated the use of these principles for all slips placed incepting
from 2.1.04, with certain limited exemptions.
The London Market Principles (LMP) have now been established for use with Binding
Authority Agreements (BAA). This note provides guidelines for the structure and
content of a LMP Slip for BAA business.
Five new model Binding Authority Agreements have been produced by the LMA to
meet the requirements of the new Lloyd’s Delegated Underwriting Byelaw. LMP Slip
templates have been developed for each of these and are available on the LMP
website – www.LMP-reforms.com .
For reference the model BAA are listed below (with the reference numbers of their
earlier versions):





Non-Marine US
Non-Marine UK
Non-Marine International
Marine
Non-Marine Canadian
LMA3002
LMA3003
LMA3004
LMA3005
LMA3006
(NMA2860)
(NMA2923)
(NMA2922)
(LSW1476)
(NMA2640)
If you are not using one of the LMP slip templates for the model BAA above you
should use the guidelines below to ensure that you comply with the LMP
requirements. The model agreements listed above can be used as example formats
upon which to base any bespoke BAA.
Structure of the LMP Slip for Binding Authority Agreements
The LMP Slip for BAA business will comprise 5 sections, the first two sections
covering the equivalent contractual information as the Risk Details section in the full
LMP Slip instructions for open market business:
 SCHEDULE
The schedule associated with the BAA wording. The new Lloyd’s
Delegated Underwriting Byelaw defines the details that must be covered
within the schedule.
 NON-SCHEDULE AGREEMENTS
Additional contractual information that should be declared to the
Coverholder.
 SUBSCRIPTION AGREEMENT
Primarily to incorporate within specific headings the details previously
listed as ‘Internal Arrangements’.
 INFORMATION
 FISCAL AND REGULATORY
The following slip headings should appear in the appropriate LMP Slip section.
Completion details for each of the headings are provided in Appendix 1.
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1. Schedule Section
The conditions and requirements relating to Binding Authorities are defined within the
Lloyd’s Delegated Underwriting Byelaw. This section of the slip will contain the BAA
schedule, which provides the individual ‘variables’ for this particular Agreement
including any accompanying attachments (e.g. Claims Procedures).
It is this schedule that will accompany the BAA wording to be sent to the coverholder
for the coverholder’s signature.
Within the five model BAA, the wording (and any associated cover conditions) has
been incorporated by reference using the first paragraph of the Schedule. Therefore
if you use one of the five model agreements it is not necessary to attach the full
wording to the LMP Slip during placing. However if one of the five model
Agreements listed on the previous page has not been used, then the full wording
must be attached to the slip for placing.
The five model BAA all allow for amendments to be made to the model wording. Any
such changes should be incorporated in the schedule (in the section ‘Other
Conditions and/or Requirements – Amendments’) overcoming the need to amend the
text and the subsequent checking of the wording.
2. Non-Schedule Agreements Section
This section caters for the contractual details that have not been incorporated within
the Schedule itself.
These headings may vary for each BAA, but the Schedule and Non Schedule
Sections must between them cover the following items:
Brokerage
Other Deductions from Premium
[Taxes Payable by Insured]
[Recording, Transmitting & Storing
Information]
Where relevant
Optional heading
3. Subscription Agreement Section
This section of the slip provides headings against which the traditional ‘Internal
arrangements’ are to be recorded.
All of the following headings must appear on all LMP Slips for BAA (unless indicated
in brackets).
Slip Leader
Basis of Agreement to Binding
Authority Changes
Binding Authority Administration
Binding Authority Agreement
Production
Claims Agreement Parties
Basis of Claims Agreement
Rules and Extent of any other
Delegated Claims Authority
Expert(s) Fees Collection
Bureaux Arrangements
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[Signing Provisions]
Special Arrangements
Where applicable
4. Information Section
Details of any information provided to underwriters to support the assessment of the
risk at the time of placement.
5. Fiscal and Regulatory Section
Tax Payable by Underwriter(s)
[US Classification]
[NAIC Codes]
Allocation of Premium to Coding
Where applicable
Where applicable
Post Placement
The Binding Authority Schedule and the BAA wording (if not previously provided to
and accepted by the Coverholder) will be available to send to the Coverholder for
signature. In the event that there are amendments to the Schedule in the Slip (e.g.
Slip Leader amends the terms or conditions), then an updated version of the
schedule should be agreed by the Slip Leader prior to sending to the Coverholder.
The Coverholder must sign a copy of the appropriate Schedule page (and all
attachment pages as applicable) and return to the Broker, to be acknowledged by the
Slip Leader.
At this point there will be contract certainty and the Coverholder is authorised to enter
into contracts of insurance with effect from the agreed inception or renewal date.
Where an endorsement to the LMP Binding Authority Slip is required it should follow
the same principles relating to Coverholder acceptance/signature and
acknowledgement by the Slip Leader. This will necessitate a copy of the agreed
endorsement being sent to the Coverholder for acceptance/signature and the Slip
Leader acknowledging such acceptance on the copy endorsement. An example LMP
Binding Authority slip endorsement is attached to these guidelines at Appendix 2.
For Further Information Contact:
LMP Programme Office :
Tel: 020 7327 5220, Email: lmp@lmpoffice.com
or visit the London Market Principles web site at WWW.LMP-REFORMS.COM
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APPENDIX 1
Binding Authority Agreements
LMP Slip Headings Completion Guidelines
Non Schedule Agreements Section
Brokerage:
The London Market brokerage allowance.
This is in addition to the Coverholders commission shown in
the schedule.
Other Deductions from
Premium:
Any additional deductions from premium e.g. administration
fees, sundry payments etc.
[Taxes Payable by Insured]
Any premium taxes and charges payable by the (re)Insured
in addition to the premium, which are collected and/or
administered by underwriters e.g. UK IPT. Any premium
taxes and charges payable by underwriters should be
shown in the Fiscal & Regulatory section.
Details of procedures for storage of data, documents and
other information. This heading is optional.
[Recording, Transmitting
and Storing Information:]
Subscription Agreement Section
Slip Leader:
State who is the Slip Leader
Basis of Agreement to
Binding Authority
Changes:
Specify the basis on which agreement to changes to the
Binding Authority Agreement will be made. e.g. All matters
pertaining to this Binding Authority to be agreed by the Slip
Leader only.
N.B. The GUA should not be used for Binding Authority
business
To include the method of advising agreed endorsements to
the following market if agreement party(ies) so instruct.
Binding Authority
Administration:
Detail any arrangements between brokers and underwriters
which relate to the ongoing administration of the Binding
Authority e.g. reporting after the ‘contract year’ has expired.
Binding Authority
Agreement Production:
The type of documentation to be produced, who produces it,
who agrees it and any particular requirements e.g. specific
language.
Identity of the parties that will agree claims.
Claims Agreement Parties:
Basis of Claims
Agreement:
Where claims are referred to underwriters in accordance
with the Binding Authority, specify the basis of the claims
agreement procedure with underwriters, e.g. the Lloyd’s
1999 claims scheme.
Rules and Extent of any
other Delegated Claims
Authority:
If any of the claims agreement parties specified above will
delegate their claims processing and agreement to any
other party this should be specified here, including any
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limits that may apply, e.g. all claims less than USD XXXX or
experts fees USD XXXX.
Expert(s) Fees Collection:
The party(ies) responsible for the collection of experts fees.
There are eight options available under the expert fees
collection arrangements (see attached list).
Bureau(x) Arrangements:
Any specific arrangements relating to the bureau e.g.
delinked accounting etc.
[Signing Provisions:]
Only to be completed if there are any signing arrangements
relating specifically to underwriters’ participation e.g
disproportionate signing or variations to current market
practice.
Special Arrangements:
Any other (internal) arrangements that cannot be more
specifically accommodated within the headings above.
Information Section
Information provided to underwriters to support the
placement of the Binding Authority. e.g. Previous
premium/claims history, Estimated GPI. Where the
information is appropriate for inclusion in the slip it should
be shown here. Where the amount or format of the
information is not suitable for inclusion the location of the
information should be clearly referenced from this section
but should be made available to all underwriters during
placing.
Fiscal and Regulatory Section
Tax Payable by
Underwriter(s):
Identify any premium taxes and charges payable by
underwriters from the premium paid to them.
[US Classification:]
To be entered as appropriate
[NAIC Codes:]
To be included when applicable.
Allocation of Premium to
Coding:
Show the allocation, where appropriate, of premiums over
multiple risk codes where they will always be in a fixed
proportion.
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Expert Fee 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 LMP
reforms. This scheme allows affected parties to choose a collection process best
suited to the particular circumstances of the individual policy. The LMP Slip includes
a slip heading of “Expert(s) Fees” within the “Subscription Agreement” section. This
is where the particular option chosen from the list below should be recorded.
Options
The options should be selected from and agreed upon by brokers and Underwriters
at the time of placement along with any other qualifications or provisions deemed
necessary by any of the affected parties.
1. ins-sure 'Experts Fees Service' to be service provider for London market share
only.
2. ins-sure 'Experts Fees Service' to be service provider for all slip security,
including overseas.
3. Alternative named service provider to collect London market share only.
4. Alternative named service provider to collect all slip security, including overseas.
5. Alternative named service provider to collect only overseas percentages in
conjunction with Option One above.
6. Brokers to collect fees.
7. Broker to collect experts' fees, to be remunerated on a financial basis agreed
between the underwriters and broker at time of placement.
8. Any other agreement that can be determined between affected parties at time of
slip placement.
N.B. The Slip Leader must ensure that any special fee bill collection arrangements
with third party service providers which the expert in question has in place are not
prohibited or adversely affected by the selection process above.
Scope
The options for fee collection recorded in this document may be used with all London
market slips. If an LMP slip is used then the slip heading will be available to record
the necessary information. If the slip is not produced to the LMP structure then it is
recommended that a slip heading of “Expert(s) Fees” be inserted to record this
information.
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APPENDIX 2
Attaching to Policy/Risk Ref No
Endorsement No
Currency
Gross Premium
In All
Total
Registration
Serial
VAT
Registration
Assured/Account
Sett due date
C
a
t
e
g
o
r
y
TOC Tribunal
Def
Adj
Lloyd’s
ILU
LIRMA
Leading U/wr
Companies
Dated in London:
L.P.S.O. number and date
I.L.U. number and date
Planned Settlement Date
R/I
Yes
No
Date
Bkr
Lists
Date
Date
Yes
No
L.I.R.M.A. number and date
ACCEPTANCE OF THE COVERHOLDER
Signed and accepted on behalf of the Coverholder
Name and Position of Signatory
Date of Signature
Acknowledged by Slip Leader on behalf of all subscribing underwriters
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Marine War