Prior submit

A Toronto coverholder holds a Lloyd's binder that lets it bind warehouses on its own up to 10 million Canadian dollars of insured value. In comes a cold storage warehouse worth 18 million. It cannot bind it: it has to send it to the syndicate, with the file, and wait for written agreement before issuing anything. That is the logic of prior submit. In its narrowest form the whole contract is built this way: the delegate gathers, prepares and presents, every risk goes through the managing agent's underwriter before it is committed, and the coverholder only keeps the issuing of documents once agreement has come back. More often, prior submit is a clause in an ordinary binder. The binder binds on its own whatever fits its criteria and submits the rest: risks above the limit, activities outside the rating guide, territories out of scope, loss history above a threshold. Lloyd's does not treat the two forms the same way for approval and oversight, since a delegate that binds nothing exposes the syndicate less than one that commits it alone. Trouble comes from the gray zone between them. An underwriter who replies by email "fine by me" with no premium or terms, a coverholder who binds before the answer because the client is waiting, a risk submitted one year and then renewed without a new submission: each produces, at the first claim, a policy nobody can say binds the syndicate. Bordereaux therefore have to separate what was bound under the authority from what was accepted on submission, with the reference of the agreement. Not to be confused with an underwriter's internal referral to a superior, covered under underwriting authority, or with special acceptance, which brings a risk into a reinsurance treaty.