Underwriting agencies

What is an Underwriting Agency?

An Underwriting Agency is a Spanish legal entity holding a binding authority, granted by one or several insurers. The delegated authority contract authorises the underwriting agency to accept and write certain risks on behalf of such insurers.

With regard to Lloyd’s, the underwriting agencies may work with one or several Lloyd’s Syndicates and, therefore, may hold one or several binding authorities.

Do they assume the risks directly?

The underwriting agency always acts for and on behalf of the insurer/s that delegate/s the authority to bind risks. Consequently, the insurers are the one assuming directly the risks.

What is a Binding Authority?

A binding authority is the English name of the power that an insurance entity/Lloyd’s Syndicate grants in favour of the underwriting agency.

The binding authorities of the Lloyd’s coverholders define in depth the legal relationship between the Lloyd’s Syndicate and the underwriting agency. Hence, it details the risks that the underwriting agency may write; its the terms and conditions as well as the financial, temporary and material limits. It also identifies the individuals who are empowered to bind insurance, regulate the fees and commissions, the information and reporting duties, the claims handling and, even, the applicable taxes and charges.

Must the Underwriting Agencies be licensed?

Yes. Prior to start the activity, the underwriting agencies must obtain an administrative license from the Spanish DGS.

In order to obtain and keep the license, the underwriting agencies must serve an application before the DGS and demonstrate that they meet the legal requirements.

Is there an Administrative Registry of Underwriting Agencies?

Yes. Upon obtaining the administrative license from the DGS, the underwriting agency will be registered with the Administrative Registry of Underwriting Agencies. The access to such Registry is public and free.

The Registry identifies the underwriting agency, the insurer/s with whom it works, and the binding authority’s duration, risks and renewals.

Therefore, any underwriting agency wishing to operate validly must be registered with the DGS’s Administrative Registry of Underwriting Agencies.

Lloyd’s also keep a registry of approved Lloyd’s coverholder/underwriting agencies at www.lloyds.com or, if you prefer, you may approach Lloyd’s Iberia, Lloyd’s representative office in Spain.

Are the Underwriting Agencies allowed to work with more than one insurer?

Yes. Art. 60 of the Law 20/2015 of 14 July, which regulates the underwriting agencies, expressly provides that the underwriting agencies may act on behalf of one or more insurers.

Can the Underwriting Agencies enter into letter of terms with brokers?

Yes. The underwriting agencies can enter into letter of terms (“cartas de condiciones”) with brokers and broking firms. For transparency and legal certainty reasons, the letter of terms should clarify the fact that the underwriting agency operates and write risks for and on behalf of the insurer granting the binding authority.

How operates an Underwriting Agency?

The operative of an underwriting agency depends on its type of binding authority. There are very wide binding authorities and others which require the prior authorisation of the insurer / Lloyd’s Syndicate before accepting and writing a risk.

Generally, an underwriting agency shall have faculties to analyse the risk to be insured and quote it, discuss covers, decide about the acceptance and underwriting of the risk as well as to prepare and issue the contract of insurance and manage, together with the intermediary, the premium collection and the administration of the contract.

What happens in case of a claim?

The underwriting agencies have delegated powers for the handling, negotiation and settlement of claims. In some cases, they have authority for handling and settling them directly (always under an agreed limits); in other cases, the underwriting agencies should obtain the authorisation of the insurer on whose behalf they operate.

In case of a claim, the role of the underwriting agency is always to make possible that that the claim was handled in the quickest and most efficient way.

Is your client protected?

Yes. The client that insures his risks through a Lloyd’s underwriting agency, duly licensed by the DGS and registered with the Administrative Registry of Underwriting Agencies, enjoys the same protection and rights than if taking over the policy directly with the insurer.

The insurers’ customer service departments shall deal with and resolve any complaints or claims that may be submitted in connection with the activity of underwriting agencies. In the event of legal actions, the competent court will be, in the majority of cases, the one of the insured’s domicile.

Which are the advantages of working with a Lloyd’s Underwriting Agency?

The Lloyd’s underwriting agencies offer a complete and high quality service, tailor-made solutions and high specialisation. As they hold binding authorities, the underwriting agency issues the contract of insurance INMEDIATELY, always provided that the risk was accepted and was within the binder’s limits.

The Lloyd’s underwriting agencies mean an alternative for the insurance intermediaries to access to the specialisation, unique solutions and insurance capacity of the Lloyd’s insurance market. All the foregoing, in YOUR LANGUAGE, in a friendly and simple way and with the maximum guarantee and legal security.

In conclusion, immediate issue of policies, an agile and high quality service, tailor-made solutions, specialisation and access to Lloyd’s are the added values that the Lloyd’s underwriting agencies offer.