LMA releases new clause to strengthen sanctions compliance in (re)insurance

The Lloyd’s Market Association (LMA) has released a new model clause called the General Sanctions Financial Crime Documentation Clause.

Known as LMA5670, the clause is designed to enhance the ability of (re)insurers and brokers to comply with evolving sanctions and financial crime regulations.

It also introduces a contractual obligation for (re)insureds to provide documentation upon reasonable request, particularly to deal with situations where such obligations arise mid-contract.

The LMA said the clause should provide insurers and brokers with an added layer of protection and to “future-proof” their contracts.

’Proportionate response’

The clause is designed to work alongside existing sanctions clauses such as LMA3100A and LMA3200 and includes safeguards to ensure that (re)insureds are not penalised for non-compliance due to circumstances beyond their control.

Arabella Ramage, legal and regulatory director at the LMA, said: “This clause is a practical and proportionate response to the increasing demands placed on our market by sanctions legislation.

”It provides clarity and contractual certainty for all parties, while ensuring that compliance obligations can be met without unnecessary disruption. Importantly, it also recognises the critical role of brokers in the compliance chain, giving them the tools they need to act responsibly and effectively.”