Managing agents are increasingly involved in placements that span multiple jurisdictions, each with their own legal frameworks, regulatory requirements and market conventions. Therefore, a single policy wording may need to be able to accommodate risks across borders, whilst remaining coherent, enforceable and aligned with the commercial reality of any given placement.
This has created a need for innovation in more traditional wordings that may have been originally drafted for use in a single country. Wordings that once worked well for this purpose now require adaptation to meet the demands of global clients and their brokers.
One of the main challenges in internationalising wordings is balancing legal soundness with underwriting practicality. Applicable law and jurisdiction clauses, arbitration provisions and service of suit mechanisms must be anchored to the appropriate law, clearly drafted and enforceable. At the same time, there needs to be flexibility afforded to underwriters to tailor coverage to the requirements of the insureds across their portfolio of risks, all without compromising contract certainty.
As placements commonly span multiple jurisdictions, managing agents and brokers within the Lloyd’s market are navigating a landscape of regulatory divergence and legal complexity. Jurisdictions are evolving at different speeds, with varying expectations around claims notification protocols, tacit acceptance rules (as seen in Brazil), collateralisation requirements (notably in India) and dispute resolution mechanisms, such as service of suit and arbitration (particularly relevant in the US and UK). These differences can significantly impact enforceability and certainty. To address this, the market has seen a shift towards jurisdiction-sensitive wordings that allow for local adaptation without compromising the integrity of the contract. The LMA Wordings Committee, Legal Committee and Regulatory Committee have been instrumental in developing guidance notes and clauses that support this approach, enabling underwriters to respond confidently to the demands of international placements.
This also extends to coverage matters, where we see more emphasis on the ability to customise wordings in a modular fashion. For instance, when dealing with business interruption coverage across multiple jurisdictions, the ability to choose between gross profit and gross earnings for different locations could be vital in securing the commercial viability of the placement and meeting the expectations of insureds active in different countries.
The trend towards internationalisation is not one that is likely to pass, it simply reflects how the market is evolving. As risks become more interconnected and placements more complex, wordings must continue to keep pace and reflect the realities of modern risk placement. This means enabling flexibility and commercial support for clients without compromising on legal certainty and enforceability.
