This quarter has seen the Loan Market Association (LMA) publish a template insurance broker’s letter in an attempt to streamline and improve the process of agreeing broker letters in LMA real estate finance transactions. Anyone who has had the pleasure of negotiating and agreeing these letters will know that at times the process can be arduous and even delay a transaction.
For those unfamiliar with broker letters, their aim is to obtain various confirmations in respect of property insurance to lenders so that the lenders may place reliance on the underlying insurance. Amongst other things, confirmations usually include statements such as that the insurance complies with loan covenants, premiums have been paid and the broker is not aware of anything that would invalidate the insurance. The LMA broker letter has been pulled together by law firms, traditional and non-traditional lenders, insurance bodies and insurers, with the aim of creating a balanced position for both insurers and lenders.