Coverholder
Company authorized by a managing agent to enter into contracts on behalf of a Lloyd's syndicate, within the limits of a binding authority and subject to market approval.
Lloyd's gave up its admitted licenses in Illinois, Kentucky and the US Virgin Islands in 2020 and now writes in the United States on a surplus lines basis only; a Lime Street syndicate has nobody on the ground to write a Florida homeowners risk or a Brazilian truck fleet anyway. The coverholder is that local presence. An independent broker or agent, it receives from a managing agent, under a binding authority, the power to bind the syndicate within a written scope: classes of risk, territories, limits per policy, rating, mandatory exclusions. It issues policies, collects premium and, where the binder allows, settles claims below a threshold. Two safeguards set it apart from ordinary outsourcing. Approval comes from Lloyd's itself rather than the syndicate alone, and Lloyd's keeps a single register the whole market checks before taking a line on a binder. And the managing agent answers for what its delegate writes, hence periodic audits, monthly bordereaux and accumulation monitoring. The channel carries a lot of weight, with several thousand approved coverholders worldwide.
Textbook case: a Lloyd's approved coverholder based in Florida can issue homeowners policies on behalf of three syndicates at once, within a per-risk insured value and a per-county accumulation set in the binding authority. The managing agent's annual audit checks issued policies against those limits. Breaching a county accumulation is the most common finding, because you cannot see it policy by policy.
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