What is the primary function performed by coverholders in the Lloyd's market?

In the Lloyd's market, coverholders play a crucial role in facilitating the underwriting process and managing risk for the syndicates. Their primary function involves handling claims and underwriting contracts on behalf of the Lloyd's syndicates. By having the authority to underwrite insurance policies and manage claims directly, coverholders help streamline the operations of insurance transactions within the Lloyd's framework.

In doing so, they bridge the gap between the syndicates and the insured, allowing for more responsive and efficient service. This includes assessing risks, determining appropriate coverage terms, and managing the claims process when incidents occur. Such authority not only enhances the capacity of syndicates to distribute risk but also improves customer satisfaction by providing localized, tailored service.

The other options, while relevant to the market, do not fully encapsulate the primary role of coverholders. For instance, while marketing policies might be a part of their function, it is not the main responsibility. Similarly, negotiating with other insurance companies and acting solely as intermediaries do not highlight the unique underwriting and claims handling capabilities that define a coverholder's role. Thus, the emphasis on their comprehensive involvement in both underwriting and claims management accurately reflects their primary function within the Lloyd's market.