Created by the Lloyd’s Act 1982, the Council manages and supervises the Lloyd’s market. It is the internal regulator of Lloyd’s subject to the overriding supervision of the FSA. The Council has six working, six external and six nominated members. The appointment of the nominated members has to be confirmed by the Governor of the Bank of England. Lloyd’s members select the remaining members. The Council makes decisions, issues resolutions, requirements, rules and byelaws, but now delegates a range of issues to the Lloyd’s Franchise Board.

The external regulator, the FSA, delegates to the Council of Lloyd’s, the internal regulator. The Council must maintain an effective delegation of responsibilities for the purpose of carrying out the Society’s regulatory functions so that the Council can adequately control them. The Society deals cooperatively with the FSA in carrying out those regulatory functions and notifies the FSA when proposing byelaw changes. The byelaws are supplemented by Core Principles for Underwriting Agents and various codes. The FSA will regulate Lloyd’s brokers from 2005. See MARGIN OF SOLVENCY; REQUIRED MARGIN BUSINESS); REQUIRED MARGIN (LONG TERM BUSINESS). (GENERAL

Lloyd’s Act 1871 incorporated Lloyd’s as a ‘Society and Corporation’ without distinguishing between the two. However, FSMA, s. 190, specifically makes the Society an authorised person enabling the FSA to make rules and take disciplinary action against it. The FSA can issue directions to members of the Society or (s.193) direct the Society, through its Council, to impose obligations on its members. The Society is often said to comprise those individuals and entities that are for the time being members of Lloyd’s plus the legal rights and all property that collectively belongs to them.

Born out of London Market Principles 2001. See SLIP.

London market excess of toss (a type of reinsurance).

Policy providing a benefit to help the policyholder meet his loan obligations during periods of incapacity through sickness or accident or through unemployment following redundancy. It is a creditor insurance.

The amount of a mortgage expressed as a percentage of the property value or purchase price. A mortgage of £75,000 on a £100,000 property value would mean a LTV of 75 per cent.

A loan facility generally available under a personal pension scheme. Common uses of the loan include purchase of house or business premises (pension mortgages), or new machinery, or meeting short-term requirements. The policyholder has to provide security for the loan, as the pension policy cannot be used for this purpose. A first or second charge on property is normally taken but the lender may take other forms of security. The loan does not have to be repaid until retirement at which time it is financed out of the tax-free lump sum available at that time.

Whole life and endowment policies include a privilege clause undertaking to grant a loan up to 90 per cent or 95 per cent of the surrender value. The rate of interest is determined at the time of the loan. Repayment can be made at any time or when the policy matures. Meanwhile interest and premiums are payable. An alternative way of securing a loan on a life policy is to use it as collateral security when borrowing from a bank.