Broker Amendments to LMA Model Clauses - New Clause References to be Used

The LMA, on behalf of its members, publishes LMA (and previously NMA) referenced clauses as models. These clauses are purely illustrative and are published for information and guidance for Lloyd’s managing agents, brokers and other market participants. All contracting parties are free to agree to different conditions/amend the model clauses as they see fit; the LMA does not protect its intellectual property rights over model clauses. It is for underwriters to decide whether any contractual language is acceptable on any given risk.

We have increasingly been made aware of examples where clauses referenced as “LMAxxxx (amended)” or “LMAxxxx as attached” include changes that fundamentally alter the clause, such as removing or reversing an exclusion or removal of other key provisions. The LMA’s members have expressed a concern regarding risks to contract certainty and misrepresentation that could arise from such practices. The LMA’s members have expressed a clear preference that:

a) “LMAxxxx (amended)” should be used by brokers for minor amendments only. Minor amendments might include non-material drafting changes for clarity or consistency, such as “£” replaced with “GBP” “Policy” replaced with “Agreement” (or vice versa) etc.

b) Significant or material changes to a model clause, such as removing an exclusion, should be reflected in a change to the reference (e.g. “Broker1234”).

NB The LMA’s members do not object to brokers also providing the original clause reference in addition for easy comparison (e.g. “Broker1234 based on LMA1234”).

Naturally, any changes proposed to a model clause should be brought to the attention of the contracting parties as part of normal contract negotiations, to ensure a fair presentation of the risk etc.

Please note, where a clause contains a blank field for completion or otherwise indicates changes are permitted or required (such as deletion of an option), we do not consider such changed to be a minor amendment or material change for the purpose of this bulletin.

David Powell
Head of Technical Underwriting
david.powell@lmalloyds.com

Arabella Ramage
Legal Director
arabella.ramage@lmalloyds.com