SAMPLE POLICY

ERRORS

SEHRISH SIDDIQUE
MSi10MBA015

Most common reasons Xchanging
finesse a policy

Non material minor variations
Use of information
Lines clauses
LSW1001
WHAT DOES MEAN BY TO FINESSE A
POLICY?
WHAT IS XCHANGING?

In the Lloyds market & the London market, the
drafting of policies has long been the responsibility of
the broker
This requires them to maintain skilled staff to
prepare the policies
They can also submit policies to Xchanging to be
checked & signed on behalf of the insurer

XCHANGING
It is a public company that specializes in outsourced
office processes
It assumed the roles of the;
Lloyds policy signing office(LPSO)
The policy signing & accounting center(PSAC)
It is responsible for receiving & checking policies from
brokers. Now they offers a complete back office
outsourcing service
This trend places increased onus on the broker to
prepare its slips with clarity, precision and care.
Otherwise, the savings achieved will be diminished by
rework.
Traditionally, to reduce the potential of these errors
much of London market had worked to standard
policy forms or broker wordings that had been lodged
with LPSO & PSAC.
For drafting errors the power of modern word
processing is both an advantage & curse. As
wordings can be changed quickly unlike the process of
typing but that very flexibility with poor discipline
has led to an epidemic of wordings where drafting
errors can perpetuate undiscovered until they are
discovered by a claim
Outside the Lloyds market, the convention has been
for insurer to issue policies based upon data presented
by broker
Thus, for both sectors of the market, broker plays an
important role in the drafting & issuing of policies
This responsibility has been enhanced by the arrival of
CCI
Name: Hira Inayat
Roll No: Msi10mba016

Issue;
Non Material Minor variation:

Example:
If the slip refers to Aircraft 1 registration XYZ,
Aircraft 2 registration ABC and refers to trading for
Aircraft 1 and Aircraft 2 but when trading is
shown in the policy, it refers to XYZ and ABC.
Likewise, if the slips states reinsured XYZ Ltd as per
Form but the policy says XYZ Ltd as detailed
herein.

Applicability:
This issue is pertinent for all markets.
Solution:
Brokers must ensure that the slip/contract is drafted
in the same way that they wish the policy to be
worded.
Reason:
These non material errors and flaws must be keenly
observed by the brokers because if there will be any
issue even of the minor wording as stated in the
above example, the court will favor the weaker party
that is insured as the party that is insurer is the one
who has drafted the document so the whole of the
liability is on the insurer.
These issues may also create problem in the settlement
of claims.
Reason:
There can be an issue in the claim settlement and in
that case court will favor the weaker party that is
insured as the document is drafted by the insurer and
all the liability will lie with the insurer.
Rushna Mirza
(Msi10MBA018)
In some cases a clause or wording refers to
something that is shown on the slip (policy
document) under the information section of the
slip. For example, the clause states that the
porposal form is that attached , but the only
reference to the porposal form is under the
information section.
In this example, this error is occurred by the
broker as he only mentioned the reference number
of the proposal form
He didnt attach the proposal form.
FAIQA SADAF
(MSI10MBA022)
Information would not normally be included in
the policy, but in this instance it would be
included in order to complete the blank within
the wording.
In many cases , the information would be more
appropriately shown under the Risk Details
section of the slip/ contract.

In particular the most commonly occurring
examples of this relates to proposal form.
The slip/contract has the conditional heading of
proposal form which should appear under this
detail.
Claims Against Insurance
Brokers
Arranging Insurance which does
not meet your requirements
Mr. G wanted insurance for a motor boat whilst
it was laid up for repair. The policy arranged by
the broker B did not cover the boat whilst
anyone was on board. Work was being done on
the boat.
An explosion occurred and someone was
injured. He sued Mr. G. Mr. Gs insurers said
the policy did not cover the claim. The broker
was sued for selling an inappropriate policy.
Presented By
ANILA JAMIL
MSi10MBA019
LINE CLAUSE
Line clause falls where a policy is written for
less than 100% .

In this situation, the policy must include a line
clause.

For example, Lloyds underwriters bear less
than 100% signed line or an order applies.

The line clause clearly establishes the
relationship between lines and order that
what is the order placed by client through
broker and what certain percentage of the
risk is accepted and signed by the insurer or
reinsurer?

For example that the percentage Lloyds
signed line is a percentage of the order and
not part of the order.
It means that whenever the policy is written
for less than 100% in Lloyds, it should include
the line clause on the basis of percentage of the
order.

Percentage Of The Order:

If client B gives the Broker a 50% order and
decides to self insure the rest, and then which
percentage is accepted, it will be the percentage
of order.
Existing policy forms do not contain a space or
clause where the relationship between order and
signed lines can be shown.
Where appropriate, and a policy is required , broker
should include reference to a line clause (LSABC001).
The Lineslip reference is used by the Broker to
identify the Lineslip. This can be a number or a name.
If the contract has been produced to the MRC
standard, this should be shown under the basis
of written lines slip heading.
Where the contract follows An earlier version
of the slip guidelines, it should be shown under
the conditions.

On reinsurance business, interest & liability
agreement should form part of any agreed
wording, or be incorporated within the slip/
contract.
This policy shall operate in all respects as if a separate
policy had been issued to each party here under, except
that in no event shall the total liability of the insurers
in respect of all parties insured hereunder exceed the
limit of indemnity stated in this policy
The subscribing insurers' obligations under
contracts of insurance to which they subscribe are
several and not joint and are limited solely to the
extent of their individual subscriptions.
The subscribing insurers are not responsible for
the subscription of any co subscribing insurer
who for any reason does not satisfy all or part of
its obligations.
The clause is also known as LSW1001.
Where the slip provides LSW1001, but the
broker has omitted to include in the policy

The Clause is applicable in almost all Markets w.r.t.
Insurance.
For contracts prior to the MRC, where
LSW1001 is included in the slip, brokers must
ensure that it is also included within the policy.
For MRC contracts brokers need to ensure
attestation and several liability provision
contained within the LMA3333 clause are
reflected in the policy.
THANK YOU!!!!