Lloyd’s Europe
Recommendation 9

Article 16 of the EU Insurance Distribution Directive 2016/97 (IDD) states that (re)insurers may only use the (re)insurance distribution services of registered (re)insurance intermediaries. (EEA countries of Norway, Iceland and Liechtenstein are also subject to IDD).

Recommendation 9 of the European Insurance and Occupational Pensions Authority (EIOPA) Recommendations for the insurance sector in the light of the United Kingdom (UK) withdrawing from the European Union (EU), dated 19 February 2019, states that UK insurance intermediaries conducting distribution activity in respect of insurance contracts where both the policyholder and the risk are located in the EU (cumulative test) must be established and authorised in the EU. While the EIOPA Recommendations are non-binding, member states are required to indicate whether they will comply and, if they do not intend to comply, to provide reasons for doing so. All member states, including the EEA countries of Norway, Iceland and Liechtenstein, have indicated that they will comply with Recommendation 9. Note that EIOPA Recommendation 9 does also apply to reinsurance.

In August 2019 the Financial Services & Markets Authority (FSMA) in Belgium announced that for (re)insurance contracts where the policyholder and the risk (i.e., the risk location for regulatory purposes) are both located in the EEA, and the contract is placed with a Belgian insurer, only (re)insurance intermediaries that are authorised in the EEA are permitted to be in the distribution chain.

Therefore, if a (re)insurance intermediary located outside the EU/EEA is intending to transact a (re)insurance contract where the policyholder and the risk are located in an EU/EEA country, the (re)insurance intermediary must be authorised in the EU/EEA before transacting the contract. This may be done by the intermediary being authorised in the EU/EEA territory where the policyholder is located or by being authorised in another EU/EEA territory and passporting into the country where the policyholder is located by notifying its EU/EEA home state regulator.

The adoption of Recommendation 9 by European national regulators means that Lloyd’s Europe is only able to accept new or renewing business (both insurance and reinsurance) from intermediaries where the risk in question is for a policyholder in the EU/EEA state and the risk location for that risk is also  within the EU/EEA, if all intermediaries in the chain are authorised within the EEA/EU. This primarily impacts brokers and coverholders that have their authorisation in the UK from the Financial Conduct Authority (FCA) and previously conducted business within the EU/EEA in reliance on passporting rights.

During 2020 Lloyd’s contacted all brokers and coverholders who were no longer able to bring impacted business to Lloyd’s Europe to explain the changes and the steps that needed to be taken.

Lloyd’s Europe is working to ensure that, following Brexit, Lloyd’s policyholders across the EU/EEA can continue to access the underwriting expertise and financial security of the Lloyd’s market and their existing policies can continue to be serviced by the Lloyd’s market, including the payment of valid insurance claims.  Where brokers and coverholders have established EU/EEA authorised companies Lloyd’s Europe has established fast track processes to onboard them.

Following the adoption of Recommendation 9, Lloyd’s Europe needs to make changes to the business it can accept through non-authorised intermediaries. Recommendation 9 also has implications for the administration of business to be transferred to Lloyd’s Europe pursuant to the Part 7 scheme undertaken by Lloyd’s in December 2020. Complete information on the requirements for Brokers and Coverholders and on the options for transferring the servicing of the business is included in the EIOPA Recommendation 9 guidance.

Lloyd’s has produced an addendum to the standard Lloyd’s Europe TOBA to be signed by UK authorised brokers, which confirms that the Lloyd’s is unable to accept impacted business from them. Lloyd’s Europe has written to all brokers that are required to sign this addendum.

UK authorised coverholders that have a Coverholder Authority Agreement (CAA) with Lloyd’s Europe should have endorsed their binding authorities to confirm that the coverholder will not bind ‘impacted business’. LBS0082 has been prepared for this purpose.

EU/EEA authorised brokers that wish to place business, including business impacted by Recommendation 9, with Lloyd’s Europe must first enter into a TOBA with Lloyd’s Europe. If an EU/EEA authorised firm does not already have a TOBA with Lloyd’s Europe, it will need first to be registered as a Lloyd’s Broker, for which Lloyd’s operates a fast-track process for groups that have an existing registered Lloyd’s Broker. For further details please contact LloydsEurope.TOBA@lloyds.com.

Coverholders that wish to be appointed by Lloyd’s Europe must first enter into a CAA and will require approval as a Lloyd’s coverholder.  Coverholders should contact their broker who will advise on the process or otherwise contact LloydsEurope.DelegatedAuthority@lloyds.com.


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