An Explanation of Lloyd’s Slips

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Although Lloyd’s slips are now accepted electronically, they were originally printed on paper. They contained all details of the risk that was to be placed on Lloyd’s of London’s insurance market. The Lloyd’s slips, which are standard documents in a format that are meant to help not only the underwriter to take into account the risks but also the policy writer and those responsible for accounting and checking the premium. Or the slip will be rejected.

Although the slip gives a summary of the risk, an insurance broker who passes the slip to a client must be briefed with additional facts and have all pertinent material, such as maps, plans, survey reports, detailed claim records, and any other information that may impact the risk. When preparing the slip, the insurance broker must present a balanced and accurate description of the risk. He should also anticipate any questions that may arise and make this known on the slip. However, the insurance broker must answer any question that is asked if he doesn’t know the answer. He should inform the customer and refer to the slip for more information. When filling out a Lloyds slip, it is important to remember that every material fact must be disclosed.

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If a risk must be spread across a number syndicates in order to agree a rate that is acceptable to other subscribing and underwriters, the lead underwriter or ‘leader’ must have the trust of all other underwriters. It is important for Lloyd’s brokers to know who the leader should be approached first. However, it doesn’t mean that the first person to approach the underwriter will always win the slip. There is less competition if high amounts of insurance are required and there must be a lot of syndicates involved. A broker might be able to find a lower rate or better terms for smaller risks by shopping around. Although he is the most likely to write a large line, the lead underwriter may not be the best.

Good negotiators are essential for a broker in insurance. Although tenacity is necessary, it should not be to the point that it prevents the business from being closed. The goal is to have the discussions reach a satisfactory conclusion so that both the broker and the underwriter, along with the client, are satisfied that the best arrangements have been made. Sometimes, a Lloyd’s broker may need to get almost unfairly competitive terms. These terms may be offered by a co-operative underwriter, provided that there is enough business to qualify.

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The broker must complete the placement after obtaining a lead, which may only be for a small percentage. Although it may be possible to place the risk using Lloyd’s underwriters, for which a slip is sufficient, sometimes the amount of exposure will require the use of international insurance companies.

A binding authority, also known as a ‘cover’, gives the cover holder the authority to accept risks within limits and terms specified on the slip. This is the broking operation. It involves the negotiation of the binding authority, the limits, and the terms. Once the agreement has been made, the underwriters are not required to make any reference to it. However, the binding authority must be renewed each year.

However, line slips do not grant full authority to the cover holder. Line slips do not give full authority to the cover holder. It is common for the lead underwriters to see the line slip and to agree to the terms and conditions of the risk. However, the remaining underwriters must adhere to their line slip agreement for their respective proportions.

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The insurance policy becomes effective as soon as the underwriter signs the slip that he accepts the risk starting at a specific date. The client will be notified as soon as the placement has been completed. Once the slip is received, it will be sent to the accounting department for processing.

Sometimes, the Lloyd’s broker that placed the risk might be required to negotiate with an underwriter about a claim. Except for very small broking companies, it’s more common for a special claims broker, whose sole responsibility it is, to handle these matters. The broker may also have to negotiate with underwriters who employ loss adjusters and other negotiating or assessing parties. The slip will be carefully examined in the event of a claim.

In the past, slips had to be sent directly to Lloyd’s underwriting area. However, it would be impossible for Lloyd’s today to transact any insurance business this way. This problem has been solved by many car insurance syndicates at Lloyd’s. They allow insurance brokers to send slips directly to them. These motor syndicates may have set up local offices throughout the country. Local motor insurance brokers will deal directly with these offices and pass the slips to them in order to close the deal. This allows Lloyd’s syndicates now to compete with large national insurance companies.

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