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Market Reform Contract (MRC) for Binding Authorities and Lineslips

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. Summary. Very little has changed!. Contents. Background MRC (Binding Authorities) Lloyd’s Bulletin (Y4133)

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Market Reform Contract (MRC) for Binding Authorities and Lineslips

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  1. 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

  2. Summary Very little has changed!

  3. Contents • Background • MRC (Binding Authorities) • Lloyd’s Bulletin (Y4133) • MRC (Lineslips) • Implementation Timescale & Actions • Market Reform Contract Endorsement (MRCE) • Future Plans & Actions for You

  4. Background • Why change at all? • MRC (Open Market) • MRCE • Combined Certificates & Several Liability • Lloyd’s Bulletin Y4133 • Overall, close call but worth new version

  5. 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

  6. 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

  7. 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

  8. 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)

  9. 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

  10. 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

  11. 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

  12. 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

  13. 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

  14. 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)

  15. 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

  16. MRC (Lineslips) - Changes • New Broker Remuneration and Deductions section: • Total Brokerage, Other Deductions from Premium

  17. 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

  18. 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

  19. 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)

  20. 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!

  21. 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

  22. Contacts LMBC: Mark.Knight@lmbc.co.uk 0207 397 0252 LMA: Adrian.Graham@lmalloyds.com Peter.Martin@lmalloyds.com 0207 327 3333 Lloyd’s: Steve.Draper@lloyds.com 0207 327 6064 Paul.Brady@lloyds.com 0207 327 5750 IUA: John.Hobbs@iua.co.uk 0207 617 4445 MRO: mro@marketreform.co.uk 0207 327 5220

  23. Questions for Panel? Mark Knight (LMBC), David Banks (Travelers), Paul Brady (Lloyd’s), Steve Hulm (MRO) 3 April 2008

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