The roles of brokers, underwriters and other market intermediaries
The roles of brokers, underwriters and other market intermediaries
This domain examines who performs which function in a London placement, whose agent each party is, and where duties and liabilities fall.
Brokers
Two functions are often split. The producing broker introduces the client and gathers information; the placing broker (a Lloyd's broker where Lloyd's capacity is used) presents the risk and signs the slip, becoming broker of record. In law the broker is the agent of the insured, not the insurer - so the duty of fair presentation under the Insurance Act 2015 rests with the insured and is discharged through the broker's presentation. Brokers also handle mid-term adjustments, claims notification and premium settlement, and must disclose remuneration where required.
Underwriters
Class underwriters at Lloyd's, or company market underwriters, assess, price and accept risk within delegated authority. A leader sets terms for the market; followers accept. Underwriters may delegate through binding authorities to coverholders and MGAs, using written underwriting guides, authorities and audit programmes.
Other intermediaries
- Coverholders bind risks on an insurer's behalf under a binding authority.
- TPAs administer claims; loss adjusters investigate and quantify.
- Run-off agents manage discontinued portfolios.
- Claims brokers present and negotiate claims.
Worked example. An overseas retail broker passes a commercial property risk to a London placing broker, which places 70% with a Lloyd's syndicate and 30% with a company. The insured omitted to mention a fire at a sister site. The nondisclosure sits with the insured; the London broker's presentation may be criticised for not probing, but liability does not shift to the underwriter, who may apply Insurance Act 2015 remedies if the breach was not deliberate or reckless.
Traps. Candidates lose marks by calling the broker the insurer's agent, by assuming Lloyd's brokers act only for Lloyd's, and by treating a coverholder as an insurer. Do not confuse the leader's role with the broker of record, and remember a TPA's authority is contractual - it cannot vary cover.
Key points
- The broker is agent of the insured; the insured owns the duty of fair presentation.
- Producing and placing broker roles are frequently split; the placing broker signs the slip.
- Underwriters act within delegated authority; leaders set terms for followers.
- Coverholders and MGAs bind under written binding authorities.
- TPAs and adjusters administer or investigate claims without varying cover.