Syndicates empowered to act faster by Lloyd’s – if a hard market ever returns
Lloyd’s syndicates will be able to get business plans approved faster in the event of the next hard market if triggered by a single big event.
In new plans, Lloyd’s has committed to enhancing and speeding up the process of approving syndicate business plans in the aftermath of a market turning event (MTE), an insurable loss so significant it results in a rapid upturn in pricing.
The measures were included as part of a report setting out six guiding principles explaining how Lloyd’s would respond to a MTE. The six principles are categorised into two areas: crisis management, to ensure the market responds to a crisis effectively, pays claims as quickly as possible and remains solvent; and opportunities to support the market.
Lloyd’s said it would focus on shortening the review and agreement process of business and capital plans, allowing syndicates to respond more effectively to the aftermath of a major catastrophe and enable capital to flow into the market more efficiently.
Jon Hancock, director of performance management, Lloyd’s, said: “We want to make it easier for syndicates to do business by focusing our oversight efforts on the important things. One important area where we can help is to make sure the Lloyd’s market is in a position to act swiftly and decisively to any future market-turning events. This is about stronger, smarter oversight.”
He added: “We don’t want to impose overly burdensome requirements on syndicates or insist on any unnecessary processes or paperwork. We want to make it as straightforward as possible to raise new capital. Doing so will ensure that Lloyd’s is even better prepared for once-in-a-generation market turning events.”
The last clear market changing event was caused by the World Trade Center attacks in September 2001, after which there were rate increases of approximately 40 percent across all classes of business. More than half the new reinsurance capital raised globally in the immediate aftermath of 9/11 went to Bermuda.
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