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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