Coverholder Assessments
Objective
To establish whether a proposed binding authority coverholder has the necessary knowledge, controls, experience and resources, to effectively manage a binding authority.
Assessment Scope
Governance
Corporate Governance: Corporate Governance & Management infrastructure. Proposed management of binder activities detailed within the delegated authority, inclusive of premium income / aggregate exposure limits, and Coverholder willingness to comply with Franchise Board requirements, as may be amended from time to time.
Company Policy
Platform: Policy and Procedural controls pertaining to the conduct of (re)insurance mediation activity, with particular emphasis on Conflicts of Interest, Financial Crime, and Treating Customers Fairly.
Capital & PI
Finance: Current and historical assets and liabilities. Financial Management and Credit Control arrangements.
PI: Adequacy of Professional Indemnity cover, and details of existing / ongoing disputes and litigation.
Regulation & Licencing
Regulation: Registered with territorial regulatory body for the conduct of (re)insurance mediation activities.
Licencing: Maintenance of necessary licences to conduct (re)insurance mediation activity in those territories within which such business is conducted.
Knowledge & Experience
Binder activity: Knowledge & experience in business class / type, and an understanding of London Market operations and processing arrangements.
Reputation
Firm: Standing in the insurance industry, and membership of recognised trade and professional bodies and / or associations.
Directors / Officers / Staff: Reputation, competence, and character.
Resources
Staff:
Resources to comply with:
- Service standards offered to customers;
- Lloyd’s Franchise Board requirements;
- Efficient premium collection / claim payment.
Underwriting: Sufficient personnel to accommodate system and control administration in relation to binder underwriting, and alternative resource in the event of a single nominated underwriter.
Claims: Sufficient personnel to accommodate system and control administration in relation to claims handling, and alternative resource in the event of a single nominated claims handler.
Business
Underwriting plan:To include business prospects / sources, profit targets (and historical profit margins where appropriate), details of other delegated authorities managed, market analysis, risk selection criteria, premium calculation criteria, and synergy with other business within the firm.
Nature of business: details of past, present, and forecast underwriting.
Underwriting
Binder Terms: Evidential underwriting controls to ensure risks bound within binder terms, with premium rating schedules commensurate with risk to be underwritten.
Claims
Settlements: Evidential claims handling procedures to ensure claims agreements are in line with delegated claims handling authority, and referral to insurers will be undertaken in accordance with agreed claims handling delegation, for high value and / or rejected claims. Claims handling not influenced by Profit Commission incentives.
Other
Other business activities: Extent to which prevailing business activities may divert attention from binding authority operation, and management controls in place to ensure continued binder operations will meet expected standards.
Systems
Data records: Processing and accounting system’s ability to record / produce reports, detailing risks bound, premiums collected, claims paid, transactions processed, insurance documentation issued, and contract certainty measurement.
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