When a broker places an insurance policy on a subscription basis with Lloyd's underwriters, to whom do they pay the premium?

The correct answer is that the premium is paid to the leading Lloyd's underwriter. When a policy is placed on a subscription basis with Lloyd's underwriters, it means that multiple underwriters agree to share the risk associated with the policy, with one leading underwriter taking the primary role in the transaction.

The leading underwriter is responsible for managing the policy and overseeing the administrative aspects, including the collection of premium payments. Thus, the broker pays the total premium to the leading underwriter, who then distributes the appropriate portions to each participating underwriter based on their share of the risk. This centralizes the payment process and simplifies transactions for the broker, allowing them to have a single point of contact.

Understanding this structure is crucial, as it reflects how collective risk is managed in the Lloyd's market, demonstrating the importance of the role of the leading underwriter in facilitating these arrangements.