We have reported previously on the progress of the Lloyd's Legislative Reform Order (LRO) through the UK Parliament and on the consultation by Lloyd's in relation to the proposed amendments to the Lloyd's Byelaws (you can see our most recent post by clicking here).
The amendments to Lloyd's Byelaws to put into effect the market reforms made by the LRO came into force on 12 January 2009. The amendments:
- Remove the restriction that requires managing agents to accept business only from a Lloyd's Broker. Instead, unless the intermediary is a Lloyd's broker or coverholder, a managing agent will be required to satisfy itself that the intermediary in question meets criteria prescribed by the Franchise Board. The managing agent will still be required to enter into a Terms of Business Agreement with the intermediary. Alternatively, in respect of personal lines, commercial life and commercial motor business, the managing agent can seek the Franchise Board's consent to accept business from any intermediary which is authorised as such in an EEA state.
- Remove restrictions which related to the divestment provisions in Lloyd's Act 1982 (which prohibited most associations between managing agents and Lloyd's brokers). Each year, a managing agent will be required to provide information in its business plan relating to any association or current or proposed underwriting transaction which may give rise to a conflict of interest. This information must specifically be drawn to the attention of the members of the syndicate in question and prospective members of that syndicate.
A copy of the amending byelaw can be found by clicking here.