PG Butler’s Coverholder Audits: Covid-19 Update: Continuation of Service
To all of my clients and friends, old and new.
As we are all affected in our unique ways by the Covid-19 Pandemic, I wish you, your work colleagues and your families’ safety and good health.
I conducted my last “in person” audit in California in late February, and have been preparing for, and scheduling, remote audits since 1st March; later receiving guidance from Lloyd’s on 18th March.
I will be proceeding on that basis for those clients who had assigned audits to me. The removal of the need to travel, along with the now widespread requirements for “social distancing” plus travel restrictions, have created breathing space in my calendar, especially as a remote audit can be completed and the report filed in significantly less time than under the previous system.
Consequently, I would be able to take on additional AiMS or solo audits should a managing agent or syndicate learn that other audit firms find themselves having to cancel or reduce their capacity for assigned audits due to lack of resources or backlogs. In those cases, please refer to the relevant classes and territories below, and let me know if I can be of assistance.
Thanks, best regards and stay well.
Peter is registered with AiMS at Lloyd’s a Coverholder and TPA Auditor.
Peter is also a member of DARA, the international Delegated Authority Reviewers’ Association: https://www.delauth.com/
In the London Market, Lloyd’s Underwriters alone issue many thousands of Binding Authorities to over two thousand Managing General Agents (MGAs). The vast majority cede delegated authority to agents overseas, and all of these delegated underwriting authorities need to be monitored carefully to ensure compliance with each Lloyd’s Managing Agency’s and Lloyd’s and London Companies’ Best Practice guidelines. This would be a massive task for any syndicate or carrier, and the market as a whole, without external resources and expertise to draw upon.
A full template of Best Practice guidelines was established in 2010 by the Lloyd’s “Delegated Underwriting Managers Group”, which group represents most of the major underwriting groups who are prominent in the class. This template, which was updated and revised in 2014 and 2018 and has just been revised again for 2019, has the support of the Delegated Authorities department of Lloyd’s Performance Management Directorate, formed the original basis for Peter’s approach to external Coverholders’ review, and continues to do so.
These guidelines state that the Auditor’s report will include and, where appropriate, specifically comment on:
- Executive Summary
- Review of any previous recommendations
- Aggregate, Risk and Premium Bordereaux Analysis
- Underwriting: e.g. adherence to set procedures, peer review, alternate market selection, etc.
- Documentation: e.g. processes and controls, timely issuance of certificates, etc.
- Accounting: e.g. complete audit trails of premium flows, commissions, local taxes, etc.
- General Finance: e.g. all funds held in accordance with binding authority agreements, etc.
- Claims Controls (with or without authority)
- IT and Data security
- Compliance and governance (including marketing and branding)
- Customer Outcomes
- Conclusions and Recommendations
- Appendices: e.g. Disaster Recovery and Business Continuity Plan
Typically, the auditor will conduct a full “soup to nuts” file review of a random sample of risks, from the original application, through the underwriting process to declinature or binding and appropriate policy issuance, subsequent documentation and accounting, and claims processes where claims authority has been granted.
N.B. Reviews will be carried out for company clients to the same standard.
A specimen audit report is available on request.
Target classes for Coverholder and TPA review by PG Butler are:
- Auto Physical Damage
- Commercial Property
- Contractors’ Equipment
- Engineering & Builders’ Risk Third Party Liability
- Flood Deductible Buyback
- General & Professional Liability
- Individual & Group Medical Plans
- Inland Marine
- Lawyers’ Professional Indemnity
- Motor Truck Cargo
- Title Agents’ Liability
- Yachts & Pleasure Craft
Target territories for external Coverholder review by PG Butler are:
- United States
- English-speaking Caribbean
“Peter is totally honest. Feedback [I receive} from the Team on the work he has done for us is very good. The reports are easy to read and make sense, and recommendations are sensible.Peter’s fees are also fair.”
Peter Bolster: Former Coverholder Audit Manager, Underwriting Operations, MS Amlin
“I have to say [that] your audit report was brilliant from start to finish! You did exactly what was asked of us and went into some good detail. For me the BAA summary was excellent and contained a good amount of information not just about the binder but the Coverholder’s operations on the binder. I was also pleased with the quotes you put in particularly with the claims one.”
Unsolicited personal testimonial from Delegated Underwriting Technician; Hiscox Syndicate 33