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Market Reform Contract MRC for Binding Authorities and Lineslips

1. Summary. Very little has changed!. 2. Contents. BackgroundMRC (Binding Authorities)Lloyd's Bulletin (Y4133)MRC (Lineslips)Implementation Timescale

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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. 1 Combination of factors have brought reform to the forefront of the agendaCombination of factors have brought reform to the forefront of the agenda

    3. 2 Contents Background MRC (Binding Authorities) Lloyd’s Bulletin (Y4133) MRC (Lineslips) Implementation Timescale & Actions Market Reform Contract Endorsement (MRCE) Future Plans & Actions for You Combination of factors have brought reform to the forefront of the agendaCombination of factors have brought reform to the forefront of the agenda

    4. 3 Background Why change at all? MRC (Open Market) MRCE Combined Certificates & Several Liability Lloyd’s Bulletin Y4133 Overall, close call but worth new version Combination of factors have brought reform to the forefront of the agendaCombination of factors have brought reform to the forefront of the agenda

    5. 4 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 Combination of factors have brought reform to the forefront of the agendaCombination of factors have brought reform to the forefront of the agenda

    6. 5 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 Combination of factors have brought reform to the forefront of the agendaCombination of factors have brought reform to the forefront of the agenda

    7. 6 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 Combination of factors have brought reform to the forefront of the agendaCombination of factors have brought reform to the forefront of the agenda

    8. 7 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) Combination of factors have brought reform to the forefront of the agendaCombination of factors have brought reform to the forefront of the agenda

    9. 8 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 Combination of factors have brought reform to the forefront of the agendaCombination of factors have brought reform to the forefront of the agenda

    10. 9 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 Combination of factors have brought reform to the forefront of the agendaCombination of factors have brought reform to the forefront of the agenda

    11. 10 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 Combination of factors have brought reform to the forefront of the agendaCombination of factors have brought reform to the forefront of the agenda

    12. 11 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 Combination of factors have brought reform to the forefront of the agendaCombination of factors have brought reform to the forefront of the agenda

    13. 12 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 Combination of factors have brought reform to the forefront of the agendaCombination of factors have brought reform to the forefront of the agenda

    14. 13 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) Combination of factors have brought reform to the forefront of the agendaCombination of factors have brought reform to the forefront of the agenda

    15. 14 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 Combination of factors have brought reform to the forefront of the agendaCombination of factors have brought reform to the forefront of the agenda

    16. 15 MRC (Lineslips) - Changes New Broker Remuneration and Deductions section: Total Brokerage, Other Deductions from Premium Combination of factors have brought reform to the forefront of the agendaCombination of factors have brought reform to the forefront of the agenda

    17. 16 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 Combination of factors have brought reform to the forefront of the agendaCombination of factors have brought reform to the forefront of the agenda

    18. 17 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 Combination of factors have brought reform to the forefront of the agendaCombination of factors have brought reform to the forefront of the agenda

    19. 18 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) Combination of factors have brought reform to the forefront of the agendaCombination of factors have brought reform to the forefront of the agenda

    20. 19 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! Combination of factors have brought reform to the forefront of the agendaCombination of factors have brought reform to the forefront of the agenda

    21. 20 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 Combination of factors have brought reform to the forefront of the agendaCombination of factors have brought reform to the forefront of the agenda

    22. 21 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 Combination of factors have brought reform to the forefront of the agendaCombination of factors have brought reform to the forefront of the agenda

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

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