Lloyd’s of London, often abbreviated to Lloyd’s, is a London-based insurance and reinsurance market. Unlike the majority of its business rivals, Lloyd’s is not an insurance company; instead, it is a corporate body regulated by Lloyd’s Act 1871 and subsequent Acts of Parliament. It functions as a primarily mutualized marketplace in which many financial supporters combine and share liability by syndicates.
These underwriters, or ‘members,’ include both companies and private citizens, the latter of which is historically referred to as ‘Names.’
ABOUT LLOYD’S OF LONDON
At Lloyd’s, the majority of the company is in general insurance and reinsurance, while a limited number of syndicates still write term life insurance. The business originated in maritime insurance and was established in approximately 1686 by Edward Lloyd at his coffee house on Tower Street. Today, it operates from a designated Lime Street location, where business is conducted at each syndicate’s ‘box’ in the underwriting ‘Space,’ with insurance contract paperwork historically referred to as a ‘slip.’
Fidentia, Latin for ‘trust,’ is the market’s slogan, and it is loosely connected with the Latin term uberrima fides, or ‘utmost good faith,’ which describes the partnership between underwriters and brokers. Lloyd’s of London is not a company that provides insurance. It is, rather, a marketplace in which insurance buyers and sellers may interact. Lloyd’s started off as a coffee shop in the 1600s, wherein ship captains, vessel managers, brokers, and other maritime enthusiasts met to purchase and distribute what is also known as ocean freight insurance. Brokers and underwriters meet today at Lloyd’s office building that has evolved as a large marketplace for the purchase and sale of a wide range of coverages, not just maritime insurance.
Lloyd’s has two distinct aspects to offer, being [A.] a marketplace where brokers and underwriters may do business and [B.] the Corporation of Lloyd’s, the firm in charge of the insurance industry. The corporation sees to it that that the syndicates are financially stable and that the marketplace runs smoothly.
WHO IS BEING ‘NAMED’ IN LLOYD’S LAWSUITS
Numerous policyholder counsel erroneously files for actions against Lloyd’s of London. Failure to correctly identify and represent Lloyd’s will result in the dismissal of civil cases and potential malpractice lawsuits against the attorneys who create these errors. New York City Process Service regulations mandate the appropriate addressing of legal papers in order to prevent said issues. The Lloyd’s marketplace is complex, involving a five-fold categorization of players being [A.] the syndicates, managing agents, [B.] brokers, [C.] cover holders, and [D.] insurance buyers.
Syndicates: The syndicates are Lloyd’s marketplace’s cornerstone. A syndicate operates similarly to a small insurance firm, taking liabilities and settling claimants. Each syndicate has one or more participants, which may be individuals or companies. Members contribute the financial resources that help the syndicate to function. Each syndicate focuses on a certain form of insurance. When Lloyd’s syndicates take on losses, they do so by subscription. This ensures that each syndicate just bears a portion of the danger.
Managing Agents: Managing agents control syndicates’ day-to-day corporate operations on their behalf. They employ and manage underwriters, claims adjusters, accountants, and other key personnel. A managing agent may be in charge of even more than one syndicate. In certain instances, the managing agent is the same organization that supplies the syndicate’s money. Coverholders are chosen and managed by managing agents.
Brokers: Insurance brokers serve as go-betweens for policy customers and syndicates. A broker must be licensed by the Corporation of Lloyd’s in order to do business in Lloyd’s marketplace. Although several Lloyd’s brokerages are in London, some are in other nations. The majority of large insurance brokerages conduct business in Lloyd’s industry, mostly via a subsidiary entity. It is important to note that an insurance customer cannot speak with Lloyd’s broker directly. They must instead go via a regional broker or dealer, who can call a Lloyd’s broker on the buyer’s behalf.
Coverholders: While brokers produce the majority of the company underwritten by syndicates, some come from cover holders. A business that underwrites risks on behalf of a managing agent is known as a cover holder. Coverholders act with the power delegated to them by controlling officers. This authority’s breadth differs. Some insurance companies have the authority to grant paperwork such as insurance binders and certificates of insurance. They will also be able to recover insurance to resolve lawsuits.
Buyers of Insurance: Most small business owners may receive the required insurance coverages from ‘ordinary’ insurers. However, certain companies might have uncommon or dangerous exposures that conventional insurers are unable to cover. Roofing companies, skydiving services, and long-haul trucking companies are some examples. Such liabilities can be insured by Lloyd’s syndicates.
Certain Underwriters at Lloyd’s, London v. Gibraltar Budget Plan, Inc., is a precedent where this requirement for appropriate process service is upheld. In December 2004, the Corporation of Lloyd’s lodged a motion to dismiss. The petition argued that it has been wrongfully named and sued. The motion, which was backed up by an affidavit, declared that the Corporation of Lloyd’s was an administrative entity that provided premises and other support services to a special and diverse global insurance sector, analogously citing the New York Stock Exchange and its provision of premises and other support services to the equity market. According to the petition, the Corporation of Lloyd’s is not an insurance provider and did not underwrite or market some form or kind of insurance in England, the United States, or any other region. The motion suggested that the proper way to bring suit was to sue those underwriters subscribing to a particular policy.
The trial court arranged a status conference in August 2006. After a decision on the petition to suppress, the appellants lodged a revised suit in which they dropped Lloyd’s company as a party and replaced it with ‘Certain Underwriters at Lloyd’s, London.’ The lawsuit did not provide any additional details about the defendant’s identity, omitting even an alleged policy number or the direction of alias summons directed at any defendant.
Perhaps uncertain of its legal standing, in this case, the Corporation at Lloyd’s filed a motion to dismiss the amended complaint. The trial court dismissed the request after a hearing. The amended complaint did not contain a policy number that could be used to identify the underwriters of the policy. There was no indication that New York City Process Service at the New York address is sufficient as to such underwriters.
The general rule when filing a lawsuit against Lloyd’s is to file in state court and list the insurer as ‘Certain Underwriters at Lloyd’s London Subscribing to Policy Number xxxxxxxxxxx.’ Cases should be filed in state court because the citizenship of the specific underwriters might not exist for federal jurisdiction.
WHO OVERSEES LLOYD’S BANK
The Department of Financial Services has laid down the extent to which it controls Lloyd’s of London. This precedent established a gap in effecting of New York City Process Service due to the lack of any overarching law or contract that authorizes the Department to allow service of a subpoena imposed by a third party on any Lloyd’s of London syndicate or other insurers that has issued policies in New York.
In terms of the statute, the precedent has interpreted Insurance Law Section 1212’s service of process clauses to extend primarily to proceedings against insurers and not to third-party subpoenas. Insurance Law Section 1213’s service of process provisions are focused on the same legal basis and do not extend to third-party subpoenas.
Subpoenas were served on nineteen Lloyd’s of London syndicates in connection with this motion. An analysis of insurance rules, such as the concepts of the authorized insurer, unauthorized insurer, and excess line market, was undertaken to clarify the legal concerns posed by the NRA’s motion was implemented, wherein it was understood that the insurance legislation defines an ‘authorized insurer’ as ‘an insurer authorized to conduct insurance business in this state in accordance with [the Insurance Law], by virtue of a license given and in force pursuant to the laws of this state or a corporate charter granted and in force pursuant to the laws of this state[.]’ Simply stated, an approved insurer is an authorized insurer to which the Department has given an insurer certificate.
The term ‘ unauthorized insurer’ is used to reference those who do not have a Department-issued insurance card. As a general rule, insurance plans can be issued in New York only by registered insurers. One of the only variations to this general rule includes excess line insurance plans. The excess line market exists to facilitate the acquisition of such specialty insurance contracts that no approved insurer can write.
Similarly, excess line contracts cover liability that is ‘in excess’ of what approved insurers would accept. As a customer wants excess line coverage in New York, they must do it via a registered excess line broker. Excess line insurers may not all be unregulated insurers. Indeed, the majority of unregulated insurers would not write excess line contracts; rather, they are insurance firms located in other states or countries that conduct no business in New York and therefore do not need a New York license.
WHO IS A REGISTERED AGENT
An agent for New York City Process Service is a person or entity that has been licensed by the state in which the company or LLC is based. Such an agent may accept the operation of the process on behalf of the company. A registered agent is an entity or individual designated to obtain process service (SOPs) where a company agency is a party to legal proceedings in the United States. Having received matters such as a lawsuit or summons, the licensed agent’s address may also be the location where the State sends the papers for the business company’s charter renewal (if so required). As an agent, a corporate organization’s approved delegate may be an executive, an employee, or a third entity, such as in-house counsel or a service provider. Failure to adequately manage a licensed agent may have a negative effect on a company and incomplete New York City Process Service.
Many businesses hire a third party to act as their licensed representative. However, a person may still act as their own licensed agent, which avoids the consequences of failing to answer to the New York City Process Service promptly. Businesses to keep a licensed representative in order to keep their corporate status. Being on record with the state secretaries, it is important that this agent still be willing to act as the corporation’s delegate for service of the law. The Corporation Division of the subject state can be helpful in deciding New York City Process Service providers in order to procure an agent for the operation of New York City Process Service.
To discuss the operation of New York City Process Service or alter the agent for the same, the company must either contact the existing licensed process operator or the Secretary of State. Any organization will approach this transition as part of its offerings.
HOW A REGISTERED AGENT ACCEPTS SERVICE
The registered agent, or agent of SOP, offers a legal address (within the jurisdiction in which the company is established) where legal documentation may be served during normal business hours. The agent’s responsibility is to collect the SOP and forward it to the entity’s assigned link inside the service range. For Lloyd’s of London, the authorized agent for New York City Process Service is Mendes & Mount LLP.
Organizations are not individuals, but rather private bodies such as companies or limited liability corporations (LLCs). This is due to the fact that there are substantive safeguards for liabilities as well as tax advantages to being ‘incorporated’ rather than ‘self-employed.’ If the licensed agent fails to fulfill their responsibilities, the business organization can suffer serious consequences. A corporate secretary or a governance-compliance officer is typically the person of a commercial company that maintains contact with a licensed agent.
Different states have different requirements for agents. For instance, Mendes & Mount LLP was Lloyd’s previously proposed California agent and yet closed their California offices on December 31, 2013. A mail forwarding program had to be set up to satisfy pre-existing strategies calling Mendes & Mount LLP. Underwriters were then required to appoint Foley and Lardner as their agent for California process service policies. Service on Foley & Lardner was to be forwarded to the New York office of Mendes & Mount.
An agent is typically a natural person living in the state in question, or, in states that permit a citizen to act as a registered agent, an entity with a business office in the state that is permitted to do business in the state. However, some states would require a corporate company to make itself legitimately entitled to serve as its own licensed agent if at minimum one of its officers is a citizen of the State. Since several states permit one business agency to work as a registered agent for another, companies may require payment to function as the registered agent for other organizations in a particular state.
HOW IS A REGISTERED AGENT APPOINTED?
The registered agent’s name and address would be used in records and articles of incorporation, the LLP registration statement, and the limited partnership certificate. The application for authorization to do business in other states will also necessitate the same. In certain cases, approval from the Representative is requested for the nomination. When a change in the Licensed Agent or their location (registered office) happens, the state must be notified.
The main goal of the agent will be to provide a legal address within the state jurisdiction that is not a P.O. Box for New York City Process Service. Additionally, there need to be people available through normal business hours to enable legal process operations to be performed in the event of a complaint. Typically, the registered agent is the individual to whom the state government customarily sends all official documents required for legal action or taxes each year. It is the registered agent’s duty to forward those suit documents and notes to the firm. Registered agents are frequently asked to counsel industry groups about whether their state government reporting status is in ‘good standing.’ The reason for these notifications being a characteristic of a licensed agent is that it is almost difficult for a private entity to keep track of legislative changes and disclose due dates for multiple jurisdictions in which it may transact business, given the diverse laws of different states.
Failure to maintain a licensed agent can result in the revocation of a corporation’s or LLC’s legal status, the imposition of penalty fees on an employee, or both. This lack of an agent would be a blatant flouting of New York City Process Service regulations.
Mendes & Mount LLP is Lloyd’s recommended agent in the majority of other nations. The use of the firm is not mandatory, however, and underwriters can select another agent if desired. Overarchingly, Mendes & Mount LLP remains Lloyd’s suggested agent for most states.
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1. Lime Street in East Central London
2. Certain Underwriters at Lloyd’s, London v. Gibraltar Budget Plan, Inc., 9 So. 3d 646 (Fla. 4th DCA 2009)
3. Lipcon v. Lloyd’s, 148 F.3d 1285, 1288 (11th Cir.) 1998
4. E.R. Squibb & Sons, Inc. v. Accident & Cas. Ins. Co., 160 F.3d 925 (2d Cir. 1998) (explaining the structure of the business of Lloyd’s).
5. Underwriters at Lloyd’s, London v. Osting-Schwinn, No. 08-15809, — F. 3d — (11th Cir. August 5, 2010).
6. In response to the National Rifle Association’s (‘NRA’) request to compel Lloyd’s Entities to comply with non-party subpoenas.
7. N.Y. Ins. Law § 2118(b)(3)(requiring an excess line broker to seek to place the risk with authorized insurers before placing it with an unauthorized insurer on the excess line).
8. N.Y. Ins. Law §§ 2105, 2118.
9. Mendes & Mount LLP 750 7th Avenue, New York, New York 10019
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