Slips for all placements of binding authorities at Lloyd's will need to comply with London Market Principles (LMP) standards from the start of 2005, it announced.
Lloyd's said the move would improve the certainty, clarity and efficiency of Lloyd's policies by bringing 5000 binding authority contracts, representing over 20% of Lloyd's premium, within the existing mandate.
Lloyd's head of business process reform Iain Saville, said: “The new binding authority slip will create certainty of wording at the point of placing, for the first time, for those slips placed using a standard agreement.
“This major step forward reduces risk and cost for all involved in binders. It sets an example for the future of other classes of Lloyd's business.”
Lloyd's will not mandate the use of the LMA model agreements. But it said it will regard any slip which complies with the LMP binder slip standard and is based on one of the model agreements as prima-facie evidence of compliance with its requirements.
Saville said: “LMA member firms have committed to produce up-to-date model agreements for each of the five classes of binding authority, in final form no later than the end of September.
“This commitment is a major contribution to reducing the costs and risks of uncertainty in the marketplace, and the many people involved deserve the whole market's sincere thanks.”
