UK-based Amlin Underwriting has been fined £630,000 by Lloyd’s for breaching its Premium Trust Deed (PTD).
After a restructure in 2014 in the Amlin group, it was found that premiums for some re-insurance contracts not related to the Lloyd’s market were settled from the premium trust fund.
The Amlin group then comprised Amlin Underwriting along with two non-Llyod’s insurance firms. Lloyd’s has accused Amlin that the payments for the premiums were done on behalf of several of its group entities including the non-Lloyd’s firms.
Further, the payments made on behalf of them were not related to the underwriting of Amlin Underwriting’s Syndicate 2001. Lloyd’s has called this as a violation of the PTD terms.
According to the terms of PTD, assets are held in it for the benefit of members and subsequently for policyholders. As a result, they cannot be diverted to settle liabilities of entities that are not related to Lloyd’s.
Amlin has been accused of not ensuring that the matter was investigated properly, thereby not doing its duty of promptly notifying the board of the Amlin group and also Lloyd’s.
Lloyd’s performance management director Jon Hancock said: “The fine reflects the importance that Lloyd’s places on the terms of the PTD being followed.
“The reputation of the market depends on our syndicates and policyholders knowing that assets held on their behalf are used appropriately.
“When an error is discovered it is incumbent on our firms to respond quickly and effectively.”
Amlin Underwriting has acknowledged the breach while there was no accusation from Lloyd’s that it was done intentionally. It has repaid all amounts that were wrongly taken along with interest.
Lloyd’s stated that the solvency of PTD was never at risk at any point of time in connection with the breach.
Image: Lloyd's building in London, UK. Photo: courtesy of Lloyd's of London/Wikimedia Commons.