Lloyd's Market Association establishes contingency clause

Lloyd's Market Association establishes contingency clause | Insurance Business

Lloyd

The Lloyd’s Market Association (LMA) has published policy language aimed at ensuring continuity of coverage in the event of market closure because of the coronavirus pandemic.

The LMA5392 clause will come into play in case access to Lloyd’s is prohibited and the emergency trading protocol fails for more than one day during the seven business days prior to a scheduled renewal.

Under the clause, the (re)insurance contract will automatically be extended for 14 days from its expiration.

“Although the situation specified is extremely unlikely to occur,” said LMA deputy director of underwriting Patrick Davison, “the LMA and its members felt it prudent to draft this model clause to ensure that Lloyd’s customers are not left without coverage should the coronavirus, or any other event, prevent renewal negotiations from taking place.”

The trade body, from time to time, publishes wordings and clauses as models which are distributed for the guidance of its members. According to the LMA, members are free to agree to different conditions or amend the clauses as they see fit.