vicky-carter-gc
Vicky Carter, chairman of Global Capital Solutions, Guy Carpenter
9 September 2019 Insurance

Capital rules that reward diversity have forced Lloyd’s syndicates into uncharted lines

The drive towards diversification to achieve greater capital efficiency has been partly responsible for the poor performance of some syndicates at Lloyd’s in recent years as carriers have looked to write lines of business without the appropriate expertise.

That is the view of Vicky Carter, chairman of Global Capital Solutions, International, for Guy Carpenter and a member of the council of Lloyd’s, who told Monte Carlo Today that the benefits diversity offers in terms of capital efficiency have had an undesirable effect on the performance of some syndicates.

“I remember the days when syndicates specialised in certain lines of business,” she said.

“They have now had to diversify, but that has partly contributed to their poor underwriting results. Everyone has been under pressure to find new areas of business to write but that is not always a good thing.

“Look at the extent to which syndicates are moving to write cyber business—do they understand the exposures in that field and do they have the expertise to do it properly?”
That said, she commended the work done by the senior management of Lloyd’s in the past year to improve the performance of syndicates, which will lead to a healthier and more profitable market, she believes. She described the market as being on the cusp of one of the most exciting chapters in its history, as a result.

“The market’s results in recent years have been far from acceptable or sustainable and they had to act,” Carter said.

“It was a thankless task but, for the most part, people now see that it was absolutely the right thing to do. It will lead to a bifurcation in the market: the best-performing syndicates will get more freedom and an easier ride, while poor performers will get a tougher time. But it will make for a much better market as a result.”

She praised the way the Lloyd’s management has engaged with all the market’s stakeholders in devising a plan for the market’s turnaround.

“They are creating a vision of what needs to be done to truly transform the market and attract the very best business and people back,” she said.

She added that technology will play a big part in the market’s future, with initiatives such as the risk exchange, digital placement and the work of the Lloyd’s Lab all set to play a part in reducing the market’s cost of doing business by improving its efficiency and transparency.

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