Members' agent
An intermediary that advises individual members of Lloyd's on which syndicates to back with their capital and manages their participation, distinct from the managing agent that underwrites.
A members' agent is an intermediary approved by Lloyd's that represents capital providers, mainly individual members or their limited liability vehicles, in dealing with syndicates. It advises them on which syndicates to join and how much to commit to each, analyzes managing agents' business plans and results, handles filings, deposits of funds and distributions, and represents them in the annual auctions where rights to participate in syndicates are traded. Its role only makes sense because of the separation peculiar to Lloyd's between capital, which comes from members, and management, which belongs to managing agents: the members' agent advises capital, the managing agent manages risk. The Names crisis of the 1990s showed the cost of poor advice, since many members had been placed on syndicates exposed to asbestos and pollution losses without grasping the concentration. The reform that followed strengthened the diversification and disclosure requirements imposed on these agents.
An individual member commits 2 million pounds of capacity at Lloyd's. On the advice of its members' agent, it spreads the commitment over twenty syndicates, none exceeding 10 percent of the total, and mixes short-tail and long-tail lines: precisely the diversification that the Names ruined in the late 1980s had lacked.
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