What It Means To Be A Lloyd’s Coverholder
We are very proud of our Coverholder status and believe it is important to provide a more detailed explanation of what it means to be a Lloyd’s Coverholder and how it impacts the insurance services we offer to the renewable energy community.
GCube Insurance Services, Inc. is an approved Lloyd’s Coverholder and participates with our London parent, GCube Underwriting Limited, in a contract known as a binding authority.
The binding authority appoints both GCube organizations, by name, to underwrite on behalf of, and bind the risk capital of the Lloyd’s syndicates and markets that are signatories to the binding authority.
In addition to both GCube companies being named, specific individuals within each organization are named and granted underwriting and binding authority. The binding authority contract is negotiated annually and syndicates and insurers have the opportunity to adjust their participation on the contract for the upcoming year.
The significant point of this arrangement is that GCube Insurance Services, Inc. underwriters do the actual underwriting and binding of insurance capacity. In the normal course of business, we are not brokers and we do not shop each risk around the insurance marketplace or through Lloyd’s to get their commitment to participate on each risk. Syndicates and markets commit risk capital, on an annual basis, through the binding authority contract. They agree to participate on all of the risks GCube underwrites and accepts on their behalf over the course of that year. The list of capital providers is attached to every policy we issue and remains unchanged for the year.
For 2014, we have a binding authority for up to $500 million of property insurance capital for wind and solar risks with additional capacity available on a case-by-case basis. Twenty Lloyd’s syndicates, Munich Re and Swiss Re have each agreed to take a percentage of each risk we bind. Other segments such as biofuels, hydro and our new coverage for geothermal and biomass risks have different limits. Other lines of coverage have different risk capital providers, limits and percentages of participation in various binding authority contracts.
GCube accepts proposals for insurance, or underwriting submissions, from brokers only. We will only deliver quotations and policies through brokers. Those brokers must be approved in advance. We will enter into dialogue, however, with potential insureds to answer questions about our policy coverage, exposures to loss faced by renewable energy projects and informal non-binding cost indications to support project development. Once a broker is appointed as the representative and agent of an insurance buyer, we direct all communications and negotiations through the broker.
Finally, there are scenarios where GCube will sublimit a policy for a particular exposure such as earthquake, flood or windstorm. In that case and if requested by the broker, GCube will find and place additional capacity to augment the limits provided by insurers and syndicates on our binding authority. In the normal course of business, we do not place insurance in competition with the insurance capital we have available under a binding authority.
So what does this mean for you? As a broker and for your client, we are the decision maker for your risks. We do not have to ask for approval for underwriting guidelines, policy wording or pricing. In the event of a claim, we hold the decision for claims approval and payment.
This single source for policy approval, issuance and claims authority brings clarity to our underwriting practice and our commitment to serve you.