LLD 8.2 Compensation arrangements for individual members
The Society must maintain byelaws establishing appropriate and effective arrangements to compensate individual members and former members who were individual members if underwriting agents are unable, or likely to be unable, to satisfy claims by those members relating to regulated activities carried on in connection with their participation in Lloyd's syndicates.
For the purposes of LLD 8.2.1 R "individual member" includes a member which is a limited liability partnership or a body corporate whose members consist only of, or of the nominees for, a single natural person or a group of connected natural persons.
The arrangements referred to in LLD 8.2.1 R:
- (1)
will not compensate losses arising only as a result of underwriting or investment risk to which individual members or former members who were individual members are or were exposed by their participation in Lloyd's syndicates;
- (2)
may be restricted to compensation for losses arising out of fraud, dishonesty or failure to account; and
- (3)
should cover all regulated activities carried on by underwriting agents relating to Lloyd's syndicate capacity and syndicate membership.
The arrangements referred to in LLD 8.2.1 R should have a governance structure that is operationally independent from the Society, but which is nevertheless accountable to the Society for the proper administration of the compensation arrangements.
If the Society proposes to extend the scope of the losses covered by the arrangements referred to in LLD 8.2.1 R (beyond those resulting from fraud, dishonesty or failure to account), it should have regard to the types of losses covered by the compensation scheme.
In setting the limit of compensation payable for a single loss, and whatever co-insurance should apply, the Society should have regard to the compensation payable by the compensation scheme for similar claims relating to similar regulated activities.
The Society should consult interested parties on proposed changes in the byelaws establishing the arrangements referred to in LLD 8.2.1 R.
The Society should give the FSA adequate notice of all changes it proposes to make to the byelaws establishing the arrangements referred to in LLD 8.2.1 R.