Under the agreement thrashed out under the direction of the Lloyd’s Market Association the onus on the way in which information which enables premiums to be allocated will be removed from the brokers and handed to the market.

It has long been a bug bear for both sides with the subscription market proving a complex matrix as to who assumes which risk. However matters potentially were set to come to a head with the European Union’s investigation into the London subscription market and the criticism of the way in which the lead underwriter on the risk sets the price that has to be adhered to in the following market. 

Aviation has long been the only major class where there has been a vertical market in which underwriters throughout the slip could set the price they wished to charge for their risk and move to a greater use of vertical market would have added further complexity to the accounting and settlement process for brokers.

However the LMA said agreement had been reached. It will see brokers adopt new accounting and settlement processes based on ACORD messaging standards – known in London as ‘electronic accounting’.

It will enable them from mid 2010, to be able to submit accounting entries to Xchanging in the same way they account to other insurers, rather than the more detailed level presently required.

Rob Gillies, Head of Market Processes at The LMA, said:  “Premium settlements have historically been complicated for brokers as they have not had a consistent process for dealing with all insurers, including the Lloyd’s market. Responsibility for the production of detailed accounting and settlement information will no longer lie with the brokers. The LMA is pleased to have reached agreement on this issue with its members and welcomes a new service from Xchanging which will provide detailed accounting data for Lloyd’s insurers.”