Principles for Doing Business at Lloyd's P3.2: 3.2 Systems, controls, procedures and expertise for reinsurance purchasing and recoveries

Systems, controls, procedures and expertise enable effective management of purchasing and recoveries. Foundation: written policies and documented procedures and responsibilities for placements, administration, payments and recoveries; contract terms affirmed before inception and documentation received and checked promptly; premiums charged to and paid from the syndicate's funds and recoveries credited only to the syndicate; processes may be manual with key person reliance; analysis of the effectiveness of protections including utilisation, erosion and exhaustion; risk-based sampling of protections, underwritten risks against reinsurance terms, and claims against recoveries; appropriate reinsurance resource. Higher levels add documented and attested controls, systems holding all contract information, specialist teams, frequent erosion monitoring and second line challenge.