Tell me more about coverholders

What is a coverholder, what are the benefits of coverholder arrangements and what sorts of business do they write?

  • What is a coverholder?

    Coverholders are an important source of business for Lloyd’s. Their numbers have increased steadily in recent years, and there are now about 2,500 Lloyd’s coverholders producing 30% of Lloyd’s premium income each year.  The balance of Lloyd’s business is distributed around the world through a network of brokers.

    Coverholders allow Lloyd’s syndicates to operate in a region or country as if they were a local insurer.  This is achieved by Lloyd’s syndicates delegating their underwriting authority to coverholders.

    A coverholder can have full or limited authority to underwrite on behalf of a Lloyd’s syndicate. It will usually issue the insurance documentation and will often handle claims.  The document setting out the terms of the coverholder’s delegated authority is known as a binding authority.

  • Who benefits from coverholder arrangements?

    The coverholder model is a proven and successful way of placing business with Lloyd’s, providing benefits to each of the parties involved: 

    Benefits of being a coverholder

    Coverholders benefit from partnership with Lloyd’s syndicates by gaining access to Lloyd’s excellent brand, security and ratings, as well as access to experienced underwriters and brokers. Coverholders may therefore offer a wide range of specialist classes of business underwritten at Lloyd’s, for example personal accident cover for sports people and specialty liability insurance.

    Benefits of placing business with Lloyd’s coverholders

    In addition to the above benefits, placing business with coverholder provides a more cost effective means to access Lloyd’s than on an open market basis.     

    Benefits for Lloyd’s syndicates     

    Coverholders enable syndicates to underwrite locally without the need for expensive local infrastructure.  But, the key to this is finding coverholder partners with the right experience and quality.  These businesses will usually have considerable expertise in particular niche products and regions and have excellent local relationships and can also help develop new products in partnership with Lloyd’s syndicates and Lloyd’s brokers.

  • What sorts of business do coverholders write?

    You can see an overview of the sorts of business written by coverholders in Europe on the following link:

    View business written by coverholders in Europe

    This analysis splits the European markets into different levels of maturity from a Lloyd's perspective (established, new & non-established) and looks at business class premium flows from coverholders.  The study revealed a number of trends, which may prove useful for understanding and targeting particular business classes in Europe.

  • What can a coverholder do?

    When a Lloyd’s managing agent delegates its authority to an approved coverholder under a binding authority, the approved coverholder may enter into contracts of insurance and issue insurance documents as evidence that contracts of insurance have been accepted.

    An approved coverholder will normally also be allowed to collect premiums, and may be allowed to handle claims or perform other functions.  The scope of its authority will be set out in the binding authority.

  • How can I find a coverholder?
    Lloyd’s keeps a directory of all of its coverholders on line, which you can access from the following link. This will tell you which Lloyd’s coverholders are approved in your country.

    View coverholders directory 

    In order to find a local coverholder for a specific class of business, it makes most sense to talk to a Lloyd’s broker who deals with coverholder business. You can find a directory of Lloyd’s brokers online, which you can access from the following link:

    Search our directory of Lloyd's brokers
    By broker name, pseudonym and broker number 
    By class of business
  • How can I become a coverholder?

    To become a coverholder you must first find a sponsoring broker and managing agent willing to support your application.

    It makes most sense to talk to a Lloyd’s broker who deals with the type of business you do. You can find a directory of Lloyd’s brokers online, which you can access from the following link.

    Search our directory of Lloyd's brokers
    By broker name, pseudonym and broker number 
    By class of business

    The Lloyd's broker will be your main point of contact for information regarding coverholder processes, systems and requirements. When you have found a Lloyd's broker that is willing to sponsor your application, they will then find an appropriate managing agent to support your application. Once a managing agent has been found, they will complete a process of due dilligence on your firm. If the managing agent wishes to support your application and grant you a binding authority, they will instruct the sponsoring broker to start an application on Atlas.  

    The Coverholder application process

     

     

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Delegated Authorities Team
General help: +44 (0)20 7327 6275
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Fax: +44 (0)20 7327 6688
Email: coverholders@lloyds.com

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