Open market basis

See open market business.

Open market business

Insurance business that may be offered to and placed with any managing agent that is willing to underwrite it on behalf of its managed syndicate. It excludes business that is underwritten pursuant to a binding authority.

Open market correspondent

A firm that produces business to a Lloyd’s broker for placement on an open market basis. Lloyd’s requires that firms in certain overseas territories must be approved or registered by its attorney in fact or general representative before they can produce business to one or more sponsoring Lloyd’s brokers for placement on an open market basis.

Open year of account

A year of account of a syndicate which has not been closed by reinsurance to close.
There are two types of open year of account; naturally open years of account and run-off accounts.
Syndicates are required to keep each year of account open for a minimum of three years before it may be closed by reinsurance to close. In normal circumstances a syndicate will therefore have three naturally open years of account at any point in time: the third year of one year of account, the second year of the following year of account; and the first year of the next year of account. Thus in 2005 the 2003 year of account is in its third year, the 2004 year of account is in its second year and the 2005 year of account is in its first year.
Where the liabilities attaching to a particular year of account of a syndicate (including any prior year of account closed into that year) cannot be quantified after three years then that year of account will be left open until such time as a reinsurance to close may be effected or all the liabilities attaching to that year of account are extinguished.

Order

This may refer to -
(a) the communication by a broker to an underwriter of a client’s acceptance of his quotation; or
(b) the amount of the sum insured that is covered by a particular slip where more than one slip is used to arrange cover.

Outwards reinsurance

The reinsurance of a syndicate or of an insurance company as distinct from inwards reinsurance.

Overall premium limit (or overall premium income limit) (OPL)

The limit of the amount of insurance/reinsurance business that a member can underwrite in a given year of account, expressed in pounds sterling. It is the aggregate of the member’s allocated capacity on each syndicate in which he participates.

Overriding commission

A commission that is paid by a reinsurer to the reassured to cover the latter’s overheads in administering the reinsurance.

Overwriting

Where a syndicate exceeds its allocated capacity. Depending on the scale of the problem the managing agent of the syndicate may be required to cease underwriting some or all new business and the members may be required to make available additional funds at Lloyd’s to cover the overwriting.