In July 2014, the Society of Lloyd’s issued its minimum standards in respect of conduct risk (MS11). The standards come into effect as from 1 January 2015 except for CR13 (conduct management information (MI)) which does not come into force until 1 January 2016. Until then managing agents are expected to use their best endeavours to comply with CR13 and to ensure that they develop their MI processes so they are fully compliant with that standard as at 1 January 2016.
CR13 deals with conduct MI that might be collected by managing agents in order for them to determine whether they are treating Lloyd’s customers fairly and, if not, what action needs to be taken by whom and when. CR13 also sets out examples of conduct MI that might be collected for products with a high product risk. Lloyd’s is concerned to ensure that managing agents that seek to obtain appropriate conduct MI for products of this type are not commercially disadvantaged as a result. As a consequence, there has been widespread support for the proposal that Lloyd’s should formulate a core set of MI that must be obtained in respect of high product risks underwritten through a binding authority for Lloyd’s customers within the EEA from 1 January 2016 onwards.
On 5 December 2014, Lloyd's published a market bulletin containing a core set of MI that must be obtained in respect of high product risk products. The core set of MI is set out in annex 1 to the market bulletin. The core MI covers core policy information and cancellation, complaints and claims data that must be collected.
Lloyd’s says that the data required to be collected in the core MI is the minimum managing agents should obtain. Managing agents may need to supplement the core MI with additional data fields as well as information from other sources including coverholder audits and other ad-hoc requests or reviews. In seeking data from coverholders managing agents must ensure that they take account of the specific risk profile of the coverholder and ensure that their data requests are relevant, proportionate, and relate to the product risk of the coverholder.
Lloyd’s will keep the appropriateness of the core MI requirements under review and says that any feedback on them is welcome.