Members are required by the Lloyd’s Act to conduct
business severally and on their own account. They cannot do
business jointly with others. Members do business in syndicates,
which may contain a number of members. Some syndicates comprise
only a single corporate member. The syndicate itself has no legal
personality, is not a partnership (because there is no such
agreement among its members) and is not an unincorporated
association (as there is no central code of rules). Its management
is instead left to a “managing agent” (
LLM1090), and its assets are held on
trust.
Syndicates are formed for a single calendar year usually
referred to as a ‘year of account’, ‘year of
inception’ or ‘underwriting year’, meaning that
in which underwriting takes place; though care is needed with the
latter definition as the tax legislation simply uses underwriting
year to mean a calendar year, so it can refer also to later years
in which claims develop. At the end of the inception year the
syndicate may reform with identical or similar membership, but
there is no common legal identity between a particular syndicate
and its successor. A syndicate is often described as an
‘annual venture’, although the term
“syndicate” is often also used to refer to the chain of
successor syndicates.
Members provide capital backing to the syndicate and assume a
share of the insurance liabilities in respect of policies written
by the syndicate in proportion to the amount of their share of
(that is, of capital contributed to) the syndicate. The amount of
capital required is closely regulated (
LLM1180).
Each member receives a share of the syndicate’s profits
proportionate to their share of the syndicate’s business, and
is responsible for the losses which arise on their share of that
business.
A syndicate may be a group of several hundred Names and
include large corporate members. Names may be members of many
syndicates at the same time, but large corporate members tend not
to be. Names may also be members of Managing Agent Pooling
Arrangements (“MAPAs”) (
LLM1150), although again, the large
corporate members tend not to be.
A member may only underwrite through a managing agent (
LLM1090).
Following consolidation within the market, the number of
syndicates had declined, but showed a small increase to 66 in 2007.
The size of syndicates has tended to increase in recent years.
