New Lloyd’s Audit Scope will affect Coverholder Audits

During February 2018, Lorraine Calway attended the annual Lloyd’s Coverholder Auditors Conference in London, thankfully surviving the “Beast from the East” and consequent sub-zero temperatures. Holding a conference in London in February is certainly not favourable for attendees from our latitude! However, as usual the conference is essential for Gold Seal to understand the moves happening in the London market and to bring that knowledge home to benefit our clients.

Despite the title of the conference suggesting the content was focused on Coverholder Audits, a substantial part of the day and the later London Market Association (LMA) Auditor training session held for attendees related to claims handling and in particular, TPA audits.

An updated audit scope was released by Lloyd’s shortly prior to the conference. The focus of the new scope is the risk controls that are in place and this will result in audit recommendations being aimed at the management of coverholders and TPAs. Further work is being done by LMA to expand the question set for claims audits.

The coordination of Coverholder Audits by Lloyd’s continues to evolve and a trial is also underway for the coordination of TPA Audits. TPA Audits pose some additional challenges for coordination due to volumes as well as the non-Binder business which may require auditing. Lloyd’s has no way to capture and manage TPA audits where the arrangement is not recorded on their Binding Authority Registration system.

From a regulatory perspective, the hot topic of the day is the General Data Protection Regulation (GDPR). This is EU legislation but once the UK leaves the EU it is intended that mirrored UK legislation will be enacted. GDPR contains onerous requirements in relation to the personal data of EU residents. The other new piece of legislation which is reflected in the updated model wordings is the Criminal Finances Act 2017. The LMA has now issued updated model binding agreements and TPA wordings. Coverholders and TPAs can also expect to see endorsements to their current agreements issued shortly.

Brexit is posing many challenges for Lloyd’s and they are working through them. The new Lloyd’s Brussels subsidiary will operate as a fully functional insurance company, able to write risks from all 27 EU and 3 EEA countries via the current distribution channels of Brokers, Coverholders, and Syndicates. Claims will be paid by the new subsidiary vehicle.

Any enquiries about the new Coverholder Audit scope or the TPA Audit arrangements can be directed to Lorraine on her return to Australia in mid-April, at email address compliance@goldseal.com.au

2018-03-14T12:32:47+00:00March 14th, 2018|News|