In July 2019 Lloyd’s announced (in Market Bulletin Y5257) proposals to introduce a new oversight framework for third-parties operating in the market. On 1 July 2020, Lloyd’s announced in a further Market Bulletin (Y5296) that the framework would be brought into effect on 30 September 2020.
The new framework aims to ensure that arrangements with third-parties such as delegated underwriting authorities are more robustly managed and deliver better outcomes for policyholders. The framework has been introduced through changes to the Intermediaries Byelaw.
The changes introduced include:
- The introduction of a new risk-based approach to delegated authority applications.
- The requirement for claims third-party administrators to be approved by Lloyd’s as Delegated Claims Administrators (DCAs) and subject to ongoing oversight. From 30 September, managing agents may only delegate to approved DCAs.
- The ability for third-party distributors to be appointed without first getting approval from Lloyd’s – this would enable distributors to bind simple risks that do not require individual underwriting. This will mean that in limited cases delegation of authority to bind risks and issue contractual documentation can be permitted to firms without them being approved as coverholders.
- The flexibility to allow sub-delegation of authority.
- The replacement of ATLAS with a new online compliance tool called Delegated Oversight Manager.