When a Managing Agent wishes to establish a new service company – or a branch of an existing service company.
A service company is an approved Coverholder that has satisfied Lloyd’s that it is associated with a Managing Agent because:
(i) It is a wholly owned subsidiary of that Managing Agent or
(ii) It is a wholly owned subsidiary of the Managing Agent’s holding company or
(iii) Is authorised to enter into a contract or contracts of insurance only to be underwritten by members of a syndicate managed by the service company Coverholder’s associated Managing Agent in accordance with the terms of a service company underwriting agreement or by its associated insurance company.
In other words, it is completely aligned with one Managing Agent and only binds risks on behalf of its associated syndicate (or associated insurance company).
A Service Company Underwriting Agreement is a binding authority which authorises a service company to enter into a contract or contracts of insurance only to be underwritten by members of a syndicate managed by the service company Coverholder’s associated Managing Agent (and, where applicable, by its associated insurance company). The Lloyd’s Market Association has developed a model Service Company Underwriting Agreement which can be used in order to ensure compliance with the Intermediaries Byelaw and the Requirements to this Byelaw.