Subscription market
Market organization where one risk is carried by several insurers each taking a percentage of the same contract, on single terms negotiated by a leader.
The LSW1001 Several Liability Notice sits in almost every contract placed in London. It says the subscribing insurers' obligations are several and not joint, limited to each one's own share. The whole subscription market runs on that sentence. The broker presents the risk, a lead underwriter quotes it and sets the terms, and the followers write their lines on the same document, now the Market Reform Contract. The insured gets capacity no single carrier would have given, on one wording, and does not find a dozen different texts on the day of the loss. In exchange, the insured carries the credit risk of every line. If one carrier fails, nobody picks up its share, which is why brokers spend so much time on the security of each name on the slip. The price is normally the leader's. That saves negotiation and concentrates the quality of the underwriting in one person's judgment. The contract allows differential terms for a follower, though in practice they are uncommon. London and the specialty markets work this way. Most domestic personal lines markets do not.
Placement of a 200M EUR limit liability program in 2026: the leader quotes the layer and takes 15%, eleven followers share the rest. The insured signs one contract and receives eleven signatures. If one follower fails five years later, nobody assumes its share of a claim, and it is that absence of joint liability that prior verification of each carrier's rating is meant to address.
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