coverholder
A coverholder is a company authorized by a managing agent to bind coverage on behalf of a syndicate. In the United States, coverholders may be called managing general agents or managing general underwriters. A service company is a coverholder that is a wholly owned subsidiary of either a Lloyd's managing agent or a managing agent's holding company. All coverholders must comply with local insurance regulations and Lloyd's rules.
Additional Information
A coverholder operates under a binding authority, an agreement in which the managing agent delegates authority to the coverholder to bind specified types of coverages. The contract may authorize the coverholder to perform additional tasks, such as collecting premiums, issuing policy documents (including endorsements), or settling claims. The coverholder may not exceed the authority outlined in the agreement regarding classes of business, excluded businesses, excluded coverages, territorial limitations, maximum limits of liability, or sums insured. It must also issue and maintain the types of documentation specified in the contract and meet any stated time requirements. A coverholder may operate under binding agreements with multiple syndicates at a time.
