Evidence of Cover Q&A

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Yes

2. Must the Information section be sent to the client?

Yes, if a complete copy of the MRC is to be the insurer contract documentation. If the Information section remains blank at the end of the placing process it may be removed from a client copy MRC, without the loss of insurer approved status.

3. What can validly be removed from the client-copy MRC, without affecting its status as an insurer authorised evidence of cover?

To remain as insurer approved contract documentation, a 'client copy' of the MRC must include the Risk Details, Information (unless blank) and Security Sections, all without any alteration, plus the addition of signed lines to the Security section. The Subscription Agreement, Fiscal and Regulatory and Broker Remuneration & Deductions sections may be removed.

For the Company market, the IUA recommends: either retention of the Broker Remuneration & Deductions section; or a reference in the Risk Details section to the client's rights to request remuneration details.

4. What format can the addition of signed lines take?

There is no prescribed format, however the signed lines must be clearly expressed & distinguishable from the written lines. If a separate signed line schedule is used, it can be included within the MRC page numbering but does not have to be..

5. What should be sent to a client to confirm an endorsement?

An addendum to, or a revised version of, the original evidence of cover (which could have been a policy, a contract document, a BID or a certificate).

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6. What is the definition of "appended" for signed lines? Can you just write them on the MRC?

Yes. Appended means added in some way, but does not mean that a separate page is necessarily required. They can simply be added within the Security Details written lines pages, providing they are clearly expressed and distinguishable from the written lines.

7. Can a certificate of insurance be referenced under "Insurer Contract Documentation"?

Yes, providing it is authorised by insurers. Any insurer authorised document may be referenced under this heading.

8. If we issue a client copy MRC, do we include the original written lines (i.e. insurer stamps) as well as the signed lines?

Yes. The written lines, signed lines, and LMA 3333, which clarifies the connection between them, are all essential components.

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9. Please confirm that we can: 1) show Information after the Security Details 2) begin document re-numbering after Security details, if required 3) issue only Risk Details and Security Details to the client if we wish to use a client copy of the MRC.

Yes you can show the Information after the Security Details, but see 3 below.
Yes you can begin document re-numbering after the Security Details.
The Information section can only be removed if it is blank, and is better presented after the Risk Details if it is not blank. In addition, you must also append signed lines to the Security Details section.

10. Under "Insurer Contract Documentation", how can we show broker and insurer agreement that either a) a full copy of the MRC, or b) a client-copy of the MRC, will be used as evidence of cover?

This can be referenced under "Insurer Contract Documentation" as follows: a) 'Complete copy MRC plus signed lines as evidence of cover' or b) 'client copy MRC as evidence of cover'. Brokers are reminded that references to a BID should not be made under this heading.

11. If using an MRC as insurer approved evidence of cover how do I bring matters to the client's attention that I would previously have included within a BID?

Anything that is not already within the MRC can be referenced by the broker within their own covering letter.

12. Does a copy of the MRC satisfy the requirements of the Lloyd's Illinois Policy Office?

Generally yes, although there are some circumstances in which a policy may still be required

13. What should be sent to a client to confirm an endorsement?

The current endorsements project is considering an "MRC" format for endorsements, which may provide a 'client ready' notification. In the meantime firms should ensure that any contract changes are processed in line with Section D of the Contract Certainty Code of Practice.

14. On a retail risk, does the FSA demand that a policy be sent?

The FSA requirements for retail customers are set out in ICOB 5.3.4, as follows:

"When a non-investment insurance contract which is not a distance contract is concluded, an insurance intermediary must provide a retail customer in a durable medium, immediately after conclusion of the contract, with:

(1) a policy document ([as defined within] ICOB 5.5.27 R to ICOB 5.5.28 G); ..etc.

ICOB 5.5.27 states:

A policy document must contain all the contractual terms and conditions.

And ICOB 5.5.28 adds:

The policy document provided to a customer should contain all the contractual terms and conditions of the contract of insurance with that customer. The policy document can consist of more than one document, but all the documents making up the policy document must be provided to the customer at the same time.

However it is important to note the FSA definitions ,

" policy -

(a) a contract of insurance, including one under which a liability has already accrued; or

(b) any instrument evidencing such a contract." &

policy document - a policy in a durable medium".

Section B of the Contract Certainty Principles and guidance (June 2007) confirms our understanding that a variety of forms of contract documentation can meet these FSA requirements.

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15. I note from the questions and answers that you can now remove the Information section from MRC (Client copy) if blank at the end of the placing process. However brokers are encouraged to number the pages up to and including the security section. If you removed the " information" section surely this would encourage the client to query this?

This issue can be avoided by retaining the Information section, even if it remains blank. If the broker does remove the Information section from the client copy MRC, then they need to address the page numbering issue.

16. How & where can an insurer express their need for a separate policy in respect of their share, when other insurers are adopting the MRC as their insurer contract documentation?

An insurer can specify that they are going to issue their own policy, under the INSURER CONTRACT DOCUMENTATION heading - even though other insurers have chosen not to. A form of words along the following lines is fine " XYZ to issue a policy in respect of their own participation (on form ABC)".

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