The Lloyd’s Market Association (LMA) launches a new model clause aimed at enhancing sanctions compliance across (re)insurance contracts. The clause, titled LMA5670 – General Sanctions Financial Crime Documentation Clause, is designed to strengthen the ability of (re)insurers and brokers to meet evolving legal obligations relating to sanctions and financial crime. It introduces a contractual requirement for (re)insureds to provide relevant documentation on request, particularly to address compliance concerns that may arise during the life of a policy. By embedding this right into the contract, the clause enables firms to confirm that neither they nor their insureds are exposed to sanctions breaches or financial crime risks. The provision includes safeguards to ensure that information requests remain proportionate, limited to what is reasonably required and accessible through best efforts. It also allows for automatic contract discharge if the (re)insured fails to cooperate appropriately, aligning with recent expectations from UK authorities. The clause is designed to sit alongside existing LMA sanctions wordings, such as LMA3100A and LMA3200. An accompanying guidance note and FAQs have been published to support adoption and understanding across the market. Arabella Ramage, legal and regulatory director at the LMA, says: “This clause is a practical and proportionate response to the increasing demands placed on our market by sanctions legislation. “It provides clarity and contractual certainty for all parties, while ensuring that compliance obligations can be met without unnecessary disruption. Importantly, it also recognises the critical role of brokers in the compliance chain, giving them the tools they need to act responsibly and effectively.”
