Lloyd s Broker Registration

Lloyd s Broker Registration August 2009

2 Contents Contents 2 Foreword 3 PART 1 Executive summary 4 PART 2 The registration process 7 How do we become a registered Lloyd s broker? PART 3 The requirements for registration 11 What is required and what do we have to think about? PART 4 Considerdations for non-eu brokers 16 PART 5 Frequently asked questions 17 Appendix 19 A - Lloyd's legal framework Lloyd s provides this document (the Document ) for general information purposes only. The information contained in this Document is correct to the best of Lloyd s knowledge at the time of publishing but may change over time. The Document is reviewed and updated from time to time. If you have further enquiries regarding this Document, please contact Lloyd s Relationship Management Broker team on +44 (0) 20 7327 5619. Regulatory Disclaimer 1. The communication of information and services set out in this Document is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. In particular, the contents and/or subject matter of the Document do not constitute an offer of information, products or services to US persons or in the United States, or in any other jurisdictions where such an offer may be unlawful. 2. Furthermore, the Document does not represent a prospectus or invitation in connection with any solicitation of capital. Nor does it constitute an offer to sell securities or insurance, a solicitation of an offer to buy securities or insurance, or a distribution of securities in the United States or to a US person, or in any other jurisdiction where it is contrary to local law. Such persons should inform themselves about and observe any applicable legal requirement. 3. This Document provides information on Lloyd s and the application process in connection with Lloyd s registration of brokers to transact business at Lloyd s. This communication is not, and does not purport to be, a complete account of all matters that are or may be material to a decision as to any application. All applications will be considered on their own merits. 4. Lloyd s provides the material contained in this Document or communication for general information purposes only. 5. No responsibility or liability is accepted by the Society of Lloyd s, the Council, the Franchise Board or any other Committee or Board constituted by the Society of Lloyd s or the Council or any of their respective members, officers or advisors for any loss occasioned to any person acting or refraining from action as a result of any statement, fact, figure or expression of belief contained in this Document or communication. 6. Applicants and potential applicants should take steps to understand Lloyd s, the Lloyd s market and the implications of placing business in it. Applicants should understand that risk is the nature of insurance business and is inherent in the business underwritten at Lloyd s. Copyright notice Lloyd s 2009. All rights reserved. No part of this Document may be copied or reproduced in any material form, including being stored in any medium by electronic means, photocopying, recording, or otherwise, or transmitted in any form by any means, whether electronic, mechanical or otherwise, without the written permission of Lloyd s.

FOREWORD 3 Foreword Lloyd s strong competitive position Lloyd s competitive position is strong, supported by the positive attributes associated with its unique brand, attraction as the world s largest subscription market, London s continued position as a major international insurance and reinsurance market, and policyholder loyalty.*: the Lloyd s Market comprised 78 Lloyd s syndicates at 1 st January 2009 and the market wrote 18bn of gross premiums in 2008. most of the insurance business accepted by Lloyd s is placed through a registered Lloyd s broker, of which there were 174 as at 1 st January 2009. Lloyd s currently enjoys A (Excellent, Stable Outlook) from AM Best, and A+ (Strong, Stable Outlook) ratings from Standard & Poor s and Fitch. Lloyd s transacts business in more than 200 countries and territories worldwide. Details of the countries in which Lloyd s is licensed to operate can be found at www.lloyds.com/worldwide. * Standard & Poor s Rating of the Lloyd s Market 2008. Source of figures: - Lloyd s March 2009 Lloyd s vision and priorities The vision for Lloyd s is to be the platform of choice for insurance and reinsurance buyers and sellers to access and trade both specialist and large property and casualty risks. Lloyd s offers a range of distribution channels which allow managing agents to access specialist business. But the broker subscription model remains a core characteristic of the Lloyd s market. Lloyd s priorities for development may be found on our website at www.lloyds.com/about_us/strategy. Lloyd s brokers Lloyd s offers brokers a secure market with diverse participants with differing strategies and risk appetites, where policyholders benefit from Lloyd s reputation and service quality. Although based in London, Lloyd s is open to specialist insurance brokers irrespective of their physical location. Lloyd s welcomes applications from brokers, in the UK or overseas, who wish to become registered Lloyd s brokers and who maintain high levels of professionalism, integrity and customer service. The remaining sections of this guide explain how you can become a registered Lloyd s broker. Any queries on the matters covered in this guide should be directed to: Alan Taylor, Relationship Manager, Brokers, +44 (0)20 7327 6907 alan.taylor@lloyds.com

EXECUTIVE SUMMARY 4 PART 1 Executive Summary Introduction This guide explains the process you will need to go through to become a registered Lloyd s broker. It also highlights the information we will need and the key issues you will need to consider. The information in this guide is structured as follows: The registration process (Section 2) The requirements for registration (Section 3) Considerations for non-eu brokers (Section 4) Frequently asked questions (Section 5) The decision whether or not to accept you as a Lloyd s broker is made by Lloyd s under the Intermediaries Byelaw. A summary of the contents of this byelaw is set out at Appendix A. Why become a Lloyd s broker? Formerly brokers had to be registered by Lloyd s as a Lloyd s broker in order for them to place business directly with Lloyd s syndicates. However, as a result of legislative changes in 2008, Lloyd s syndicates may accept business from any broker subject to the broker meeting certain minimum standards. So why should you think about becoming a Lloyd s broker? The key advantages to you are The ability to market yourself as a registered Lloyd s broker, a widely recognised mark of competence and professionalism. As a registered Lloyd s broker you will be able to enter into a terms of business agreement with any Lloyd s managing agent. (In contrast if you are a non-lloyd s broker each managing agent with which you intend doing business will need to separately assess you against Lloyd s minimum standards before they can enter into such an agreement with you). Your directors will be able to take part in the governance of Lloyd s (eg by becoming members of Lloyd s who can stand for election to Council and so take a role in shaping Lloyd s future strategic direction). In addition to becoming a registered Lloyd s broker you may also wish to consider if you should become an approved Lloyd s coverholder. Unlike a broker who usually acts as a wholesale or retail broker, and acts at all times in the best interests of its clients and can refer any type of business to any Lloyd s syndicate, an approved coverholder acts as the agent of specific Lloyd s syndicate under a contract called a binding authority (sometimes known as agency business ). This allows the coverholder to enter into contracts of insurance on behalf of the relevant syndicate(s). Therefore if you only intend to act as an agent for Lloyd s syndicate you may only need approval as a coverholder. For further information on Lloyd s coverholders please see our website at www.lloyds.com/coverholders. Registration process The process and indicative timescales for a typical new broker application are set out in section 2 of this guide. In summary, this normally involves: - A pre-application meeting with Lloyd s, to clarify the application process and requirements. Formal application to Lloyd s. Obtaining third party confirmations:

EXECUTIVE SUMMARY 5 o o from Xchanging, that you are competent to process business at Lloyd s; and from a managing agent, that it will agree to enter into a Terms of Business Agreement with you. Registration as a Lloyd s broker, subject to Lloyd s being satisfied with the Xchanging and managing agent confirmations received. Registration requirements Our registration requirements are set out in section 3 of this guide. It is for you to demonstrate to us that you meet these requirements and are eligible to be registered as a Lloyd s broker. In summary, we require: - Appropriate regulatory approval by the FSA or by the relevant authority in an EU member state (or, outside the EU, by an equivalent overseas regulatory authority). Adequate systems, procedures and arrangements to conduct business in the Lloyd s insurance market. Support from at least one Lloyd s managing agent to enter into a Terms of Business Agreement ( TOBA ) with your firm. Suitable procedures to safeguard insurance monies. Professional indemnity insurance that meets our minimum requirements. If your firm is established outside the EU, additional requirements apply. Lloyd s application fee for a new Lloyd s broker is 5,000, to be paid when you make your application (payable to the Corporation of Lloyd s ). We will not refund this fee if your application is unsuccessful. There is no ongoing Lloyd s charge to brokers for placing and processing business at Lloyd s. How business is processed at Lloyd s Lloyd s is a marketplace made up of many separate syndicates and for this reason, various functions have traditionally been performed centrally on behalf of all Lloyd s syndicates: - processing premiums checking or producing policies (where required) agreeing and settling claims providing data on behalf of the market for regulatory purposes operating a central settlement system between syndicate and brokers, with a single daily movement of monies between parties. Currently these processing functions are provided for Xchanging and you should be familiar with the processing requirements set out in Xchanging s guide to Broker Registration. http://www.lloyds.com/lloyds_market/market_participants/brokers/broker_registration.htm. Xchanging will need to confirm to us that you are competent to process business at Lloyd s. While at present, these back office functions are performed by Xchanging, there is increasing scope for direct trading between parties. What does Lloyd s expect of a registered broker? If you become a registered broker you will be required to maintain and uphold high standards of service and professionalism. In particular, we will expect you to:

EXECUTIVE SUMMARY 6 Have signed a TOBA with each managing agent you do business with. Place business into the Lloyd s market. Take all reasonable steps to protect and maintain our reputation. Conduct your business in a professional manner at all times. Comply with any relevant UK or foreign insurance legislation or regulatory requirements. A number of frequently asked questions are set out in Section 5 of this guide.

PART 2 THE REGISTRATION PROCESS 7 PART 2 The Registration process Overview of the registration process An overview of the application process to become a registered Lloyd s broker is summarised in the flow chart below. An explanation of each step in the process is set out in the following pages. 1. Broker pre-application meeting with Lloyd s and Xchanging to clarify the application process and requirements and understanding of how to process business at Lloyd s. 2. Broker submits application form and application fee to Lloyd s. 3. Lloyd s reviews the application for appropriate regulatory authorisation, PI cover and client money protection and gives conditional approval of registration, subject to confirmation of a suitable TOBA and demonstration of business processing ability Lloyd s service level 1 week (UK/EU) (4 weeks for non EU territories) 4(a) Broker prepares and submits Xchanging process manual, business scenarios and banking mandates to Xchanging & Lloyd s At the same time 4(b) Broker seeks and obtains confirmation of a suitable TOBA from a managing agent 5. Xchanging reviews suitability of broker systems to process business, process manual, business scenarios and mandates Xchanging indicates if substantially complete OR identifies significant weaknesses with indicative remedial action Xchanging service level 1 week (plus 2 weeks to set up mandates) 6. Lloyd s, on receipt of a TOBA confirmation and suitable Xchanging sign off: a) confirms that registration conditions have been met; and b) adds the broker to the public register of Lloyd s brokers available on www.lloyds.com

PART 2 THE REGISTRATION PROCESS 8 Pre-application meeting Before you apply, please contact Lloyd s Broker Relationship Management team to explain that you are interested in becoming a registered Lloyd s broker. You will then be invited to attend a pre-application meeting at Lloyd s. The pre-application meeting helps us discuss with you at an early stage whether becoming a Lloyd s broker is right for your business. It also gives you the chance to find out more about what you need to do to become a registered Lloyd s broker. You will be asked to make a presentation covering: Evidence of appropriate regulatory approval from your regulator. Confirmation from your bank that client money is held in strictly segregated client money accounts. PI insurance certificates (or quotes at this stage) evidencing compliance with our minimum PI cover requirements. Confirmation from at least one Lloyd s managing agent that it would enter into a TOBA with your firm. Confirmation from Xchanging that you have sufficient knowledge and ability to transact and process Lloyd s market business (either using your own systems or those of an outsource provider). We expect the first four of these confirmations to be in place and that work will be underway on the latter two at the time of the pre-application meeting. At the meeting, we will use your draft application form and supporting documentation as an agenda. We will ask you to talk us through each area of the form and, in particular, update us on the status of each of the areas requiring external confirmation. As a result of this meeting we may decide that you are ready to proceed to the next stage and invite you to make a formal application. Alternatively, there may be some areas which you would need to work on before you proceed to formal application. We will explain why this is the case. Xchanging and managing agent confirmations The ability to transact and process business in the Lloyd s market is a key factor in deciding whether your firm should be registered. Only applicants who can properly connect to the necessary systems and competently transact Lloyd s business (using their own systems or those of an outsource provider) will be eligible to be Lloyd s brokers. In practice this will be assessed by asking Xchanging (or other appropriate third party) to work with you to assess whether your firm (or its outsource provider) can operate the necessary accounting and settlement and claims advice and settlement processes to transact at Lloyd s. You will need to make contact with Xchanging and provide all necessary information and documentation to enable an assessment to be made of your ability to place, process and service business. Such enquiries should be directed to:- Robert Gregg, Customer Services, Xchanging +44 20 7780 5725 robert.gregg@xchanging.com Xchanging will review your submission and indicate if it is substantially complete, or alternatively, identify any significant weaknesses with indicative remedial action. Xchanging will do this within 1 working week from the time it receives a complete applicant submission.

PART 2 THE REGISTRATION PROCESS 9 You will also need to obtain written confirmation from at least one Lloyd s managing agent that it is prepared to enter into a Terms of Business Agreement ( TOBA ) with your firm, on successful registration as a Lloyd s broker. Formal application Once a complete application pack, including the Lloyd s application form, associated documentation, supplementary information and application fee has been received, we will then do the following: Review your application to assess compliance with our requirements in respect of regulatory authorisation(s), professional indemnity insurance cover limits and client money arrangements. Check with the FSA, or your local equivalent regulator, to identify any regulatory issues affecting your firm or its directors and employees. If satisfied with your application, we will advise you that we would be willing to grant your firm registered Lloyd s broker status, subject to you providing us with written confirmations from: 1. a managing agent, agreeing to enter into a terms of business agreement with your firm; and 2. Xchanging, confirming that you have demonstrated a satisfactory standard of business processing ability. Alternatively, we will advise you of any matters which need to be addressed before your application may proceed. Subject to your application being complete, we will give you this confirmation within 1 working week if your firm is based in the UK or a member state of the EU. If your firm is established outside the EU, we will normally need to undertake additional work (see Section 5, Issues for overseas brokers to consider) and will give you this confirmation within 4 working weeks. Applications which do not contain all the relevant documents and information will be treated as incomplete and returned to you to complete before we can start work on your application. Registration as a Lloyd s broker On receipt of suitable written confirmation from Xchanging (confirming your ability to process and service business, the allocation of a broker number and pseudonym and receipt of all necessary bank mandates) and confirmation from a managing agent (that it will enter into a TOBA with your firm), we will: Advise you and the Lloyd s market of your registration as a Lloyd s broker. Add your name to the public register of Lloyd s brokers. We have an expectation that as a new Lloyd s broker, you will place business at Lloyd s, although you may of course place business with other carriers. Permitted use of the Lloyd s Brand Use of the Lloyd s name and logo is only permitted under certain circumstances. Full details on how and when you can use the Lloyd s name are contained within a separate guide provided to all successful applicants once registered. In summary: - Registered Lloyd s brokers may use the Lloyd s brand on their business documents, stationery and web site to market their firm, subject to the continued placing of business at Lloyd s and compliance with Lloyd s Brand Guideline.

PART 2 THE REGISTRATION PROCESS 10 If you are not placing a reasonable volume of business at Lloyd s (e.g. over a 6 month period) you will not be permitted to use the Lloyd s brand to market your firm (you may nevertheless continue to brand Lloyd s specific products sold). In the event that you place no business at Lloyd s within a 12 month timeframe, we are likely to withdraw your registration as a registered Lloyd s broker. Further review of business processing ability In the second year of your registration, we will ask Xchanging to carry out a review to assess your continuing ability to process business effectively within the Lloyd s market. This will include your performance in the areas of late premium payment, document quality, and meeting London Market Reform Standards.

PART 3 THE REQUIREMENTS FOR REGISTRATION 11 PART 3 The Requirements for registration Intermediaries Byelaw All Lloyd s brokers are required to comply with the Lloyd s Intermediaries Byelaw. A summary of the contents of this byelaw is set out at Appendix A. Under the Intermediaries Byelaw, new Lloyd s broker applicants must demonstrate that they meet the following requirements: Appropriate regulatory approval by the FSA or by the relevant authority in an EU member state (or, outside the EU, by an equivalent overseas regulatory authority). Adequate systems and procedures to conduct business in the Lloyd s insurance market. Support from at least one Lloyd s managing agent to enter into a Terms of Business Agreement ( TOBA ) with your firm. Suitable procedures to safeguard insurance monies. Professional indemnity insurance that meets our minimum requirements. Each of these areas is considered in turn below, with a number of additional considerations. Appropriate regulatory Approval UK Applicants If your firm is established within the United Kingdom, you must be authorised as a general insurance intermediary to conduct the applicable regulated activities by the Financial Services Authority (FSA). You can obtain a copy of the relevant FSA handbook and application forms for authorisation from the FSA website www.fsa.org. As part of your application we will ask you to provide a copy of your written authorisation from the FSA and details of any subsequent regulatory issues you may have as part of your application. Applicants from other European union ( EU ) states If your firm is established outside the UK but within a member State of the EU you must be registered with the appropriate body responsible for implementing the provisions of the European Parliament and Council Directive of 9 th December 2002 on insurance mediation (No 2002/92/EC) in that country. The conduct of insurance intermediation by a branch office, or subsidiary of an EU broker which is located in the UK, is permissible by virtue of the cross border services passport option enabling brokers to trade within other EU member states if authorised within their own country. Any application from non UK EU brokers must provide evidence of registration by the home state authorities and notification to the FSA of their intention to conduct business in the UK under the passport option. Applicants from outside the eu If your firm is established in a country outside the EU, you must be registered with the appropriate regulatory authority in that country (where required to do so by that country). We will look at the extent to which your local regulatory authority imposes similar requirements to those imposed under the Insurance Mediation Directive ( IMD ): If the local regulatory authority imposes similar requirements to those imposed under the IMD, then we may, at our discretion, choose to rely on that regulatory authority.

PART 3 THE REQUIREMENTS FOR REGISTRATION 12 If the local regulatory authority does not impose similar requirements to those imposed under the IMD, we will ask you to demonstrate your suitability and to complete a fuller application form that addresses such matters. In particular we will consider the following areas (see section 4, for further details): - o o o o your knowledge and ability to conduct business at Lloyd s; whether your directors, partners, employees and controllers are of good repute; the adequacy of your capital and financial resources; your compliance with local laws and requirements. You will need to show that your firm does not need to be authorised by the FSA to trade in the UK. If you are an overseas subsidiary, holding company or under common control with an existing registered Lloyd s broker, we may, at our discretion, allow you to be subject to fewer suitability checks than would ordinarily be performed for overseas brokers (see section 4 for more details). Systems and procedures to conduct business in the Lloyd s market The ability to transact and process business in the Lloyd s market is a key factor in deciding whether your firm should be registered. You must demonstrate that you can properly operate the necessary accounting and settlement and claims advice and settlement processes to transact at Lloyd s (using their own systems or those of an outsource provider) in order to be eligible to become a Lloyd s broker. In practice this will be assessed by asking Xchanging (or other appropriate third party) to work with you to assess whether your firm (or its outsource provider) has the necessary competence. Xchanging s application information pack The pack provides an explanation of London Market Processing, Xchanging s involvement and its role within the Lloyd s broker registration process. You will be required to visit at least one of the Xchanging sites, in Chatham, Folkestone or London depending on the type of business proposed. This will provide you with an overview of the activities carried out in the location and will highlight important processes and requirements. Broker Procedure Manual You will be required, to produce a brief technical procedure manual to demonstrate your understanding of broker responsibilities in London Market processing. The purpose of this document is to demonstrate how your procedures will operate in practice. It must cover the following areas. Your overall process flow and controls. Your processes for dealing with processing queries raised by Xchanging. Your process for creating MR slips and achieving contract certainty during the placing of the risk. How you will pay premiums quickly and produce policies promptly for checking by XIS (where required). Details of your procedures for claims broking and electronic claims handling. Details of your claims diary system and knowledge of the applicable Lloyd s Claims Scheme.

PART 3 THE REQUIREMENTS FOR REGISTRATION 13 Business test documents You must provide with your application a full set of documents (MR Slip, LPAN, ECF and LCCF or Treaty Statement) for each major type and class of business that you intend to place at Lloyd s. You will be required to complete the full set of documents using the example risks provided in the information pack. The documents and electronic submissions you provide will be checked by XIS to ensure they comply with MR slip requirements, are complete and suitable for processing. Xchanging Critical documents Xchanging provide documents, including bank mandates and registration forms which you must complete as part of your application. These forms are included in the Xchanging information pack. Once all of these areas have all been completed, Xchanging will confirm to us your ability to process transactions successfully. Xchanging will continue to support you after registration and you will be provided with an Xchanging Customer Relationship Manager to assist you. Terms of Business Agreements We only want to register brokers who have Lloyd s market support and will actually bring business to Lloyd s. Your application must therefore include at least one letter from a Managing Agent confirming that they will sign a terms of business agreement with you once you are registered (to be signed by a director on behalf of that managing agent). When you become registered, you must sign a terms of business agreement with each Lloyd s managing agent you intend to deal with before you start trading with syndicates managed by that managing agent. The terms of business agreement must record the general terms and conditions you and the managing agent will do business under. You must negotiate the detail of the agreement with each managing agent, but it must cover at least the following areas. Broker s authority The terms of business agreement must clearly set out what authority the managing agent gives you. Premium and claims The terms of business agreement must set out the broker s and managing agent s responsibilities regarding the holding and payment of premiums and claims monies (including the timing of such payments). Ownership of and access to records The terms of business agreement must set out what rights of access the broker and managing agent have to each other s records. Law and jurisdiction The law and jurisdiction applicable to the Terms of Business Agreement must be stated. When you are negotiating a Terms of Business Agreement, both parties will need to consider the interests of their clients and principals. The Lloyd s Market Association and the London International Insurance Brokers Association have agreed model Terms of Business Agreements which can be obtained from: - The Lloyd s Market Association Suite 358 Lloyd s One Lime Street London EC3M 7DQ Telephone: +44 (0)20 7327 3333 Fax: +44 (0)20 7327 4443 Email: lma@lloyds.com Nevertheless, you may always negotiate a bespoke agreement with any managing agent.

PART 3 THE REQUIREMENTS FOR REGISTRATION 14 Procedures to safeguard insurance monies You must demonstrate to us that you have the necessary procedures in place to protect insurance monies in the event of insolvency. In practice this means that you must demonstrate that you operate strictly segregated client money accounts or have alternative equivalent arrangements in place that we believe are prudent and appropriate: If you are a UK broker this means demonstrating to us that you meet the FSA s client money rules (as set out in the FSA s Handbook at CASS). If you are an intermediary in another member state of the EU, you will need to show us that you meet the equivalent requirements set by your home state regulatory authority. We may additionally request confirmation from the managing agent with whom you have entered into a TOBA that it is satisfied at the client money arrangements in place. Professional indemnity/errors and omissions insurance You must demonstrate to us that you have taken out and will maintain professional indemnity insurance which meets the following requirements. Limit of indemnity The minimum limit of indemnity shall be the greater of 3,000,000 or 4 times the annual net retained brokerage as shown in the most recent audited financial statements at the time of renewal of your policy. If your annual net retained brokerage is less than 15,000,000, the minimum limit of indemnity need be no more than 20,000,000. If your annual net retained brokerage is greater than 15,000,000, the minimum limit of indemnity need be no more than 30,000,000. Excess The insurance excess in respect of each claim must not be more than: 25% of your net tangible assets for the last financial year, as shown in your latest audited accounts; or 2,500,000 Whichever is less. All the figures are stated in pounds sterling. Local currency equivalents will be used based upon the relevant exchange rate at the time of you application. While the above requirements represent Lloyd s minimum professional indemnity insurance requirements, a managing agent may require higher levels of PI cover for prudential reasons when discussing its TOBA. Other considerations Admission to the underwriting room at Lloyd s Only people who hold a Lloyd s pass can enter the Lloyd s building and the Underwriting Room. You should complete the relevant section of the application form with details of the individuals who will need passes. We reserve the right to reject a pass application for any individual and in such cases will explain to you the reasons why. The Lloyd s pass is a photo identification containing the name of the person and the name of the employing firm. Therefore, the person the pass is for will need to come to Lloyd s for the pass to be issued. Only the person in the pass has been issued to can use it. Our pass administration team will contact you following registration with details of how to arrange for passes. A small processing fee is charged for each pass issued.

PART 3 THE REQUIREMENTS FOR REGISTRATION 15 Use of information submitted to Lloyd s When considering your application, we may disclose some or all of the information provided by you to: Lloyd s managing agents and underwriters; The Lloyd s Market Association; Xchanging; The Financial Services Authority or other regulatory bodies; and Financial analysts. We may also ask these parties for information to help us in reviewing your application to become a registered Lloyd s broker. We will also make the information available if requested, to Lloyd s managing agents and underwriters so you do not have to provide the same or similar information to each managing agent you may want to trade with. If you do not want us to pass on any of the information provided to us, clearly show this on the application form or supporting documents, giving reasons. We will then consider your comments. In accordance with Lloyd s obligations under the Data Protection Act 1998, you should note that personal data may be processed by Lloyd s for the purposes of the administration of insurance business, including but not limited to its regulatory activities. In the event that you are registered as a Lloyd s broker, such processing by Lloyd s will include all information collated in respect of registration. The processing of such data may also include using it as part of any review of your firm s ongoing eligibility of individuals to be granted Lloyd s passes. Personal information relating to the directors, partners, and/or shareholders of your firm may be transferred to individuals or organisations outside the EEA (for example to a Lloyd s overseas office or foreign regulator). In which event, this data may not be subject to the same level of legal protection as in the United Kingdom. Details of the individuals, organisations and countries in your case will be provided on request. Associations with managing agents Managing agents and Lloyd s brokers are permitted to have corporate associations (e.g. shareholdings or common directorships) in one another. However it is important that business placed by the broker to the agent is handled on proper commercial terms and that any potential conflicts of interest are properly managed. In addition the managing agent will be required to disclose the association. De-registration A registered Lloyd s broker established within the UK will be de-registered if it ceases for any reason to be authorised by the FSA. Similarly, an overseas broker will be de-registered if it no longer complies with its local authorisation or regulatory requirements. A registered Lloyd s broker may also be de-registered if it ceases to comply with the conditions described in this guide, the provisions of the Lloyd s Intermediaries Byelaw, or if it has not transacted business in the Lloyd s market within a reasonable timeframe (e.g. 12 months). If we intend to de-register a broker we will always seek, where possible, to explain why and give the broker an opportunity to make representations. In the event of a broker being de-registered, the fee paid on registration and/or re-registration will not be refunded.

PART 4 CONSIDERATIONS FOR NON-EU BROKERS 16 PART 4 Considerations for NONeu brokers If you are established outside of the EU you will need to show that you are registered with or authorised by an appropriate regulatory organisation and that their requirements similar to those required in the EU. You will also be required to demonstrate not only that you meet the criteria that apply to EU brokers but also: - Whether you have appropriate knowledge and ability to conduct insurance business in the London insurance market; Whether your firm and its directors, partners, employees and controllers are of good repute; The adequacy of your capital and financial resources; Whether you comply with all laws, rules and fiscal requirements applicable to you as an insurance intermediary where your firm is established and where it conducts or will conduct business; and Practical issues Lloyd s is developing practical business solutions for overseas brokers who wish to place and process business at Lloyd s, mainly through a series of electronic trading initiatives. Nevertheless, there are additional considerations if you do not have an office in London or the ability to transact face to face: How will you obtain quotes and place business with underwriters? Have underwriters indicated to you their willingness to trade by alternative methods (e.g. fax, email or other electronic advice)? How will you provide the information Xchanging need to pay premiums, issue policies and process claims? How will you obtain agreement to urgent claims? If you will use paper documents, how will you send them to London, or processing sites in other areas of the UK? If you are established in, or have your main place of business in a country where we have a General Representative, you should contact the General Representative in the first instance to discuss your plans to apply and to make sure that you are aware of any conditions appropriate to that country. A list of all Lloyd s General Representatives can be found at http://www.lloyds.com/lloyds_worldwide/lloyds_international_offices/.

17 PART 5 Frequently asked questions Who regulates insurance at lloyd s? Lloyd s is regulated by the FSA. The Society of Lloyd s itself, the managing agents and members agents operating in the market are each separately authorised by the FSA. From 14 January 2005 all insurance intermediaries established in the UK must be authorised by the FSA. The Insurance Mediation Directive introduced in the EU member states means that any insurance broker operating within other EU countries needs to obtain the necessary authorisation from the competent authority where they are established or where they have their principal place of business. Why does Lloyd s register brokers? The Lloyd s Act 1982 provides that the Council of Lloyd s may permit certain brokers to be called Lloyd s brokers which brings certain benefits to those brokers including the ability to place business with any managing agent. (If you are a non-lloyd s broker then each managing agent with whom you want to do business would need to separately assess you against Lloyd s minimum prudential standards). Our registration criteria are designed to ensure that Lloyd s brokers are likely to bring business to Lloyd s, that suitable protections are in place to protect syndicates and policyholders, Lloyd s brand and reputation and that brokers have the ability to process and transact business at Lloyd s. How can I find out about syndicates and their managing agents? A current listing of managing agents, the syndicates which they manage and contact details can be obtained from www.lloyds.com/lloyds_market/directories. Where can I find out about Lloyd s trading licences? Information regarding Lloyd s ability to trade worldwide and the network of overseas general representatives can be obtained from www.lloyds.com/lloyds_worldwide or by telephoning the Lloyd s International Trading Advice helpdesk on +44 (0)20 7327 6677 or by emailing: lita@lloyds.com. Can a new start up apply for Lloyd s broker registration? We normally require you to be able to demonstrate a trading history. In some circumstances, we may consider applications from new start up organisations and these will be assessed on a case by case basis. In any event, you will need appropriate regulatory approval before we will consider your application. What if I don t have all the administration systems required to be a Lloyd s registered broker? You may not wish to set up, initially, all the administration and systems associated with a Lloyd s Registered Broker. In these circumstances, you may instead want to outsource those arrangements fro instance with an existing Lloyd s Registered Broker who can provide the administration and systems. It is important that you have a clear understanding and agreement on your and their aims, responsibilities and rights and have those set out in an outsource agreement. We can give you details of Lloyd s Registered Brokers who provide those services if you ask. Must I have a TOBA with each Lloyd s managing agent? You do not have to obtain a TOBA with every managing agent at Lloyd s, but you must enter into a TOBA with any managing agent you intend to trade with before the conduct of business takes place. Each managing agent will assess their decision to grant a TOBA based on their own commercial considerations.

18 Must I have an office in London? You do not need to be based in or to have your principal place of business in the UK. We welcome applications for registration from overseas brokers. However, your ability to trade effectively from overseas depends on a number of factors including methods of placement, ability to process electronically and dealing with different time zones. Some further considerations for overseas brokers are set out in section 4 of this guide. Is there any ongoing transaction cost for brokers? There is no onging Lloyd s charge to brokers for placing and processing business at Lloyd s. Xchanging, who process premiums, policies and claims on behalf of the market, recover their costs by charging managing agents of syndicates, based upon the number of transactions they handled for them.

19 ANNEX 1 Appendix A Lloyd s legal framework Lloyd s Intermediaries Byelaw The decision whether or not to accept you as a Lloyd s Broker is made by Lloyd s under Section 2 of the Intermediaries Byelaw. This section of the byelaw sets our the standards expected of all registered Lloyd s brokers and provides details of: - Registration and the criteria for registration. Requirements for Lloyd s brokers in respect of Terms of Business agreements and Notification to Lloyd s. Review of registration and Lloyd s power to conduct reviews. Removal from the register and postponed removal. Requirements made under the Intermediaries Byelaw set out the detailed eligibility criteria for registration as a Lloyd s broker. The Byelaw and the requirements made under that byelaw (Chapter 2 of the Underwriting Requirements) are available from our website at www.lloyds.com/lloyds_market/tools_and_reference/lloyds_acts_and_byelaws.