Key Concepts

TL;DR

• The UMR is the unique identifier every Lloyd's policy needs. It follows a rigid format, is assigned by the broker, and can never be reused on a renewal.

• Year of Account determines which annual accounting period a policy belongs to. Each YOA is a legally separate entity within the syndicate.

• Risk codes and location splits are mandatory Lloyd's fields. They feed regulatory reporting, capital modelling, and exposure management, and wrong data has compliance consequences.

• Premium flows from the insured through the broker and Velonetic's central settlement system before reaching the syndicate. Premium Trust Funds hold it in between.

• The MRC is the standardised placing document that replaced the traditional Lloyd's slip. Contract certainty requires it to be finalised before policy inception.

UMR (Unique Market Reference)

The Unique Market Reference (UMR) is the primary key for every policy placed in the Lloyd's market. Every downstream system (LIMOSS, Velonetic, DDM, ECF) references it to link records together. It's generated once at placement and never changes for the life of that contract.

The format is strictly defined:

• Starts with the letter B

• Followed by the broker's 4-digit Lloyd's broker number

• Followed by up to 12 alphanumeric characters of the broker's choosing

• Maximum total length: 17 characters

• Allowed characters: A-Z and 0-9 only. No spaces, hyphens, or special characters.

A valid UMR looks like: B0123ABC20261234

The broker assigns the UMR. You don't generate it. When a new submission arrives, the broker will have already determined it. On renewal, the broker must issue a fresh UMR. You cannot reuse the prior year's UMR, even if the risk is identical. This is a hard rule across all Lloyd's systems.

The MRC (Market Reform Contract)

The Market Reform Contract is the standard placing document for open market Lloyd's business. It replaced the traditional placing slip as part of the London Market reform programme, and all open market risks must use it. The current version is MRCv3, with the digital equivalent known as the iMRC.

An MRC is divided into six sections:

1. Risk Details: who is insured, the nature of the risk, and the coverage period

2. Information: background context to support the underwriting decision

3. Security Details: which insurers are participating and their line sizes

4. Subscription Agreement: the terms binding all subscribing underwriters

5. Fiscal & Regulatory: tax, regulatory, and compliance obligations

6. Broker Remuneration: the broker's commission and fees

Underwriters subscribe to the MRC by writing their line on it. From a systems perspective, the MRC is the authoritative source for the UMR, risk details, and the security block. Anything entered into C2MS should match what the MRC says.

Contract Certainty

Contract certainty means that all policy terms are fully agreed and documented before the contract incepted. The London Market adopted this as a formal requirement following market reform discussions in the mid-2000s, driven by concern that disputes over wording were leaving insurers and insureds exposed at point of loss.

In practice, this means the finalised MRC (or equivalent placing document) must be in place on or before the inception date. Systems record whether a contract has been formally closed as part of the contract certainty audit trail. A policy cannot progress to Written status in C2MS without meeting those obligations.

Year of Account (YOA)

Lloyd's syndicates operate as annual ventures. Each year, a syndicate is technically reconstituted as a fresh entity for accounting purposes. The Year of Account is the year a policy (or part of a policy) is allocated to for underwriting accounting. It determines where the premium goes and where any claims are charged.

For most open market policies, the YOA is simply the year the policy incepted. A policy incepting on 15 March 2025 belongs to YOA 2025. All premium, claims, and expenses related to that policy flow into the YOA 2025 accounts.

Binder (delegated authority) business works slightly differently. The YOA for a binder is typically the year the binder itself was written, not the year individual bound risks inception. A coverholder writing risks in January 2026 under a binder placed in November 2025 will often have those risks allocated to YOA 2025.

Multi-year policies span more than one calendar year and require YOA splits. A three-year policy incepting in 2025 needs its premium allocated proportionally across YOA 2025, 2026, and 2027, because each of those years is a separate accounting entity with its own profit and loss.

RITC (Reinsurance to Close)

Once a Year of Account is roughly three years old, Lloyd's undertakes a process called Reinsurance to Close (RITC). The open liabilities of that year's syndicate are reinsured into the next year's syndicate. Effectively, the older year is closed: its remaining exposure is transferred out, and the syndicates pay and receive a premium for taking on that exposure.

RITC is why Lloyd's keeps such precise YOA records. Each year is a distinct legal entity, and closing it requires knowing exactly what claims and premium belong to it. If YOA allocations are wrong, the RITC calculations for that year will be wrong too, with downstream effects on capital adequacy and regulatory returns.

Risk Codes

Risk codes are short codes (typically one or two characters) that classify the type of risk being insured. Every policy must carry at least one risk code. Lloyd's uses them for performance monitoring, regulatory reporting, and capital modelling.

A policy can carry more than one risk code when it covers genuinely different types of exposure. A combined policy covering property damage and business interruption might carry both a property code and a consequential loss code. Where multiple codes are used, the percentages assigned to them must add up to exactly 100%.

Lloyd's publishes an updated risk code list each year. New codes added for 2026 include dedicated codes for cyber risks and transactional liability, reflecting Lloyd's intention to get cleaner reporting as those lines grow. Older codes are occasionally deprecated, so checking the current year's published list is important when setting up new policies.

SBF Class of Business

The Syndicate Business Forecast (SBF) is the annual plan each syndicate submits to Lloyd's, setting out what business it intends to write and in what volumes. SBF classes of business are the categories used in that plan, organised in a standardised hierarchy.

The top-level classes are broad: Accident & Health, Casualty/FinPro, Property, Marine, Aviation, Energy, and a handful of others. Each top-level class breaks into sub-classes. Property contains sub-classes for personal lines, commercial property, catastrophe excess of loss, and more. The sub-classes are what appear on regulatory filings and syndicate performance reports.

Risk codes map to SBF classes, though not always one-to-one. When you enter a risk code in C2MS, the system uses that code to determine the SBF class for reporting purposes. If you're uncertain which risk code to use, thinking about which SBF class you want the policy to appear under is a useful starting point.

Location Splits

Location splits record how the risk's exposure is distributed geographically. If a policy covers property in the UK and the USA, the location split records what proportion of the exposure sits in each country. They're a regulatory requirement, not an optional field.

Different territories carry different tax rates, licensing requirements, and regulatory obligations. A policy with US exposure triggers surplus lines tax obligations in the relevant states. A policy covering EU-based insureds may need to route through Lloyd's Brussels rather than London, depending on the risk type and the insured's domicile.

Post-Brexit, Lloyd's established a Belgian subsidiary (Lloyd's Insurance Company S.A.) to write European risks where the insured is based in an EEA country. Location splits are part of how the system determines whether a policy needs to route through Lloyd's Brussels or can sit entirely with the London market. Correct location data means the policy ends up in the right regulatory bucket from the start.

For catastrophe modelling, location data is equally important. If you record a US wind policy as having 100% of its exposure in Florida when it's actually spread across the Gulf Coast states, the accumulation management team will be working from incorrect data when estimating PML.

Year of Account Splits

When a policy spans multiple calendar years, its premium must be split across the relevant Years of Account. A three-year policy incepting on 1 July 2025 might allocate 20% to YOA 2025, 40% to YOA 2026, and 40% to YOA 2027, reflecting how the exposure is distributed across the policy period.

Splits must always total exactly 100%. C2MS validates this before allowing the section to progress to Quote or Written status. If the percentages don't balance, you'll get a validation error and the section won't save.

Getting YOA splits right matters more than it might seem. Each YOA is a separate legal entity within the syndicate. Premium flowing into the wrong year affects that year's profit and loss, its RITC calculation, and its regulatory returns. A clerical error in YOA allocation isn't just an accounting tidy-up: it may require formal correction through Lloyd's.

Premium Settlement

Premium doesn't flow directly from the insured to the syndicate. It travels through several hands. The insured pays the broker. The broker passes it through Velonetic's central settlement system (formerly known as Xchanging). Velonetic then distributes it to each subscribing syndicate according to their written line percentage.

While premium is in transit, it sits in a Premium Trust Fund (PTF). Lloyd's operates PTFs under strict rules. Premium held in them can only be applied for specific purposes: paying claims, covering broker fees, and meeting syndicate expenses. This structure protects insureds if an intermediary runs into financial difficulty.

For instalment policies, premium arrives in stages rather than as a single payment. Each instalment has its own settlement date, and the syndicate's share is credited when that instalment clears through Velonetic. C2MS records instalment schedules so the expected cash flow is visible at section level.

Settlement dates affect accounting periods. The date premium is credited to the syndicate's account determines which accounting period it falls into. Lloyd's has standard settlement terms (typically 30 days from signing), but bespoke arrangements can apply for large or complex risks.

Bordereaux

A bordereau (plural: bordereaux) is a periodic report that a coverholder submits to the managing agent, listing the risks bound under a delegated authority agreement. There are two main types: premium bordereaux (listing the risks written and premiums collected) and claims bordereaux (listing any claims notified or paid under the binder).

Bordereaux are typically submitted monthly, though the frequency depends on the terms of the binder agreement. High-volume or high-risk coverholders may report more frequently. The managing agent reviews each bordereau to monitor performance against the SBF plan and to check that the coverholder is writing within their agreed authority limits.

Once received, bordereau data is processed through DDM (Delegated Data Manager), Lloyd's central repository for delegated authority data. DDM validates the data against the expected format and passes it through to Lloyd's regulatory systems. If a bordereau contains errors (invalid risk codes, out-of-authority risks, missing location data), DDM flags them for correction before accepting the submission.