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  1. Point in time
    2015-06-30

INSPRU 8.1 Application

INSPRU 8.1.1 R RP

1 INSPRU 8.1 applies to:

  1. (1)

    the Society;

  2. (2)

    managing agents.

INSPRU 8.1.2 R

If a provision in INSPRU or GENPRU applies to the Society "in accordance with" this rule, the Society must:

  1. (1)

    manage each member'sfunds at Lloyd's;

  2. (2)

    manage its central assets; and

  3. (3)

    supervise the insurance business carried on by each member at Lloyd's;

so as to achieve in relation to those assets and that insurance business the same effect as the relevant INSPRU or GENPRU provision would have (that is, conforming with the requirements of any rule and taking appropriate account of any applicable guidance,) when applied to a firm or to the insurance business of a firm.

INSPRU 8.1.3 G

The Society is subject to INSPRU and GENPRUrules in respect of the insurance business of each Lloyd's member. These include rules in respect of:

  1. (1)

    the calculation of the capital resources requirements for each member;

  2. (2)

    the financial resources it manages on behalf of members; and

  3. (3)

    the Society's own financial resources.

INSPRU 8.1.4 R

If a provision in INSPRU or GENPRU applies to a managing agents "in accordance with" this rule, the managing agent must, in relation to each syndicate managed by it and for each syndicate year, manage:

  1. (1)

    the syndicate assets; and

  2. (2)

    the insurance business carried on by the members of the syndicate through that syndicate;

so as to achieve in relation to those assets and that insurance business the same effect as the relevant INSPRU or GENPRU provision would have (that is, conforming with the requirements of any rule and taking appropriate account of any applicable guidance) when applied to a firm or to the insurance business of a firm.

INSPRU 8.1.5 G

Syndicate membership may change from year to year or it may remain constant. Managing agents are required to apply INSPRU and GENPRU to the insurance business carried on through each syndicate for each syndicate year. This should ensure that INSPRU and GENPRU are applied to Lloyd's in a way that is consistent with the provision of capital to support the insurance business underwritten.

INSPRU 8.2 Special provisions for Lloyd's

Obligations under INSPRU and GENPRU

INSPRU 8.2.2 R

The Society must ensure that all participants in the Lloyd's market are made aware of their obligations under INSPRU and GENPRU.

Management of risk

INSPRU 8.2.11 R RP

The Society must establish and maintain effective arrangements to monitor and manage risk arising from:

  1. (1)

    conflicts of interest (including in relation to (2) to (4));

  2. (2)

    inter-syndicate transactions, including reinsurance to close and approved reinsurance to close;

  3. (3)

    related party transactions; and

  4. (4)

    transactions between members and itself.

INSPRU 8.2.12 R

The arrangements in INSPRU 8.2.11 R must enable the Society to identify any significant overstatement of financial resources resulting from any transaction falling within INSPRU 8.2.11R (2) to INSPRU 8.2.11R (4), including as a result of:

  1. (1)

    any differences in the amounts recorded as due or payable by each party to any such transaction; or

  2. (2)

    any actual or likely disputes between the parties to any such transaction.

INSPRU 8.2.13 R

If the Society identifies a significant overstatement of the kind referred to in INSPRU 8.2.12 R, it must ensure that an appropriate adjustment is made, including if appropriate by a deduction from or reduction in the value attributed to:

  1. (1)

    the capital resources of any member concerned; or

  2. (2)

    the Society'scapital resources.

Provision of information by managing agents

INSPRU 8.2.17 R

A managing agent must, as soon as possible, give the Society any information the managing agent has concerning material risks to funds at Lloyd's or central assets.

INSPRU 8.2.18 R

A managing agent need not comply with INSPRU 8.2.17 R if the managing agent knows that the Society already has the relevant information.

Insurance receivables to be carried to trust funds

INSPRU 8.2.19 R RP

The Society must take all reasonable steps to ensure that each member:

  1. (1)

    executes the appropriate Lloyd's trust deeds; and

  2. (2)

    carries to the appropriate Lloyd's trust fund all amounts received or receivable by the member, or on its behalf, in respect of any insurance business carried on by it.

INSPRU 8.2.20 R RP

The Society must carry all amounts it receives on behalf of any member in respect of that member'sinsurance business to the appropriate Lloyd's trust fund.

INSPRU 8.2.21 R RP

A managing agent must carry all amounts it receives on behalf of any member in respect of that member'sinsurance business to the appropriate Lloyd's trust fund.

INSPRU 8.2.22 R RP

In complying with INSPRU 8.2.19 R to INSPRU 8.2.21 R, the Society and managing agents must take all reasonable steps to ensure that amounts received or receivable by a member in respect of general insurance business and long-term insurance business are carried to separate Lloyd's trust funds.

Amendments to byelaws, trust deeds and standard form letters of credit and guarantees

INSPRU 8.2.23 R RP

The Society must, as soon as it is practical to do so, notify the appropriate regulator of its intention to approve the form of any new Lloyd's trust deed.

INSPRU 8.2.24 R RP

The Society must, as soon as it is practical to do so, notify the appropriate regulator of its intention to make any amendment which may alter the meaning or effect of any byelaw, including:

  1. (1)

    any Lloyd's trust deed;

  2. (2)

    any standard form letter of credit prescribed by the Society from time to time; or

  3. (3)

    any standard form guarantee agreement prescribed by the Society from time to time.

INSPRU 8.2.25 R RP

The Society must provide the appropriate regulator with full details of:

  1. (1)

    the form of any new Lloyd's trust deed it intends to approve, as described in INSPRU 8.2.23 R and

  2. (2)

    any amendments falling within INSPRU 8.2.24 R.

INSPRU 8.2.26 R RP

The Society must consult interested parties in relation to any new Lloyd's trust deed and in relation to any amendment falling within INSPRU 8.2.24 R.

INSPRU 8.2.27 G RP

Except in urgent cases, the Society should consult in relation to any new Lloyd's trust deed or amendments before the new deed or amendments take effect.

INSPRU 8.2.28 R RP

The information provided to the appropriate regulator by the Society under INSPRU 8.2.25 R must include:

  1. (1)

    a statement of the purpose of any proposed amendment or new Lloyd's trust deed and the expected impact, if any, on policyholders, managing agents, members, and potential members; and

  2. (2)

    a description of the consultation undertaken under INSPRU 8.2.26 R including a summary of any significant responses to that consultation.

INSPRU 8.2.29 G RP

The appropriate regulator would normally expect to receive the information required under INSPRU 8.2.25 R and INSPRU 8.2.28 R not less than three months in advance of the proposed change.

INSPRU 8.4 Capacity Transfer Market

Application

INSPRU 8.4.1 R RP

This section1 applies to the Society.

1

Purpose

INSPRU 8.4.2 G RP

The rules and guidance in this section1 are intended to promote confidence in the market at Lloyd's, and to protect certain consumers of services provided by the Society in carrying on, or in connection with or for the purposes of, its regulated activities. They do this by ensuring that the Society appropriately and effectively regulates the capacity transfer market so that it operates in a fair and transparent manner.

1

Requirement to make byelaws governing conduct in the capacity transfer market

INSPRU 8.4.3 R RP

The Society must make appropriate byelaws governing conduct in the capacity transfer market.

INSPRU 8.4.4 G RP

The byelaws referred to in INSPRU 8.4.3 R should:

  1. (1)

    ensure that adequate and effective arrangements are in place to enable members and persons applying to be admitted as members to enter into transactions to transfer syndicate capacity and settle these transactions in a timely manner;

  2. (2)

    give clear and comprehensive guidance about the dissemination of information that is, or may be, relevant to the price of syndicate capacity and the transparency of the capacity transfer market; and

  3. (3)

    prohibit unfair and abusive practices (including market manipulation), the misuse of information not generally available, and the dissemination of false or misleading information.

INSPRU 8.4.5 G RP

The Society should have adequate and effective arrangements to:

  1. (1)

    record and monitor transactions in the capacity transfer market, and maintain adequate audit trails; and

  2. (2)

    suspend or annul transactions where appropriate.

INSPRU 8.4.6 G RP

The Society should regularly review the byelaws referred to in INSPRU 8.4.3 R, taking account of the standards of conduct required in other UK financial markets.

INSPRU 8.4.7 G RP

The Society should consult members and underwriting agents before it finalises material changes in the byelaws referred to in INSPRU 8.4.3 R, and should have timely and effective arrangements for notifying them of changes in these byelaws.