That’s because these quotes are issued by underwriting agencies who are Lloyd’s of London Cover holders.
What is an underwriting agency and Cover holder, I hear you ask? In simple terms, underwriting agencies are appointed by insurers with authority to quote, bind and issue policies. Also, underwriting agencies are given authority to settle claims. A Lloyd’s of London ‘Cover holder’ is just a fancy way of saying that the underwriting agency is authorised by Lloyds.
The Underwriting Agencies Council (UAC), represents Australian and New Zealand underwriting agencies. You may be surprised to learn that UAC agencies annually handle more than $3.5 billion of Australian insurance premiums. Of this, approximately $2 billion of annual premium was placed with Lloyd’s of London. Furthermore, the UAC has more than 100 underwriting agency members. Of which, almost 50 provide professional indemnity insurance. In fact, the vast majority of the professional indemnity insurance companies offering pi insurance are Lloyd’s of London Cover holders.
Contrary to popular opinion, Lloyd’s is not one single insurance company. Lloyd’s is made up of multiple syndicates. As of the 31st December 2018, there were 99 syndicates at Lloyd’s. When considering companies offering pi insurance, many people make the mistake of thinking that all Lloyd’s quotes are the same. Remember, there are many different underwriting agencies in Australia, using different Lloyd’s Syndicates. To learn more about Lloyd’s of London visit – What is Lloyd’s?
Actually, not all Lloyds policies are the same as each underwriting agency / Cover holder. For instance, each policy may have different wordings, options, extensions and conditions. Whatever you do, don’t fall into the trap of comparing Lloyd’s professional indemnity quotes purely on price. Before choosing, make sure you get value for money by looking at both price and coverage. To help with comparing pi policies, check out our previous article on things to look for when comparing professional indemnity insurance comparing professional indemnity insurance.
This may surprise you, but Lloyd’s is the foundation of the insurance industry. In fact, Lloyd’s have been insuring Australian businesses for more than 150 years. In the last 5 years alone, Lloyd’s has paid out $6 billion in Australian claims.
Yes, is the short answer. Lloyds is approved by Australian Prudential Regulation Authority (APRA). Furthermore, all Australian UAC Underwriting Agencies either hold or operate under appropriate licences. In fact, these licences are issued by the Australian Securities & Investments Commission (ASIC) under the Financial Services Reform Act.
Better still, Policyholders can have peace of mind knowing that 3 of the world’s leading insurance rating agencies recognise Lloyd’s financial strength.
But more importantly, all Lloyd’s syndicates benefit from Lloyd’s Central Fund. This is because all Lloyd’s policies are backed by this common security. This means that a single financial rating can be applied. In simple terms, the financial strength ratings referenced apply to all policy issued by every syndicate at Lloyd’s.