Lloyd’s Plans Three-Year Strategy for Soft Market
On Thursday, the Lloyd's of London insurance market announced it would focus on protecting its profitability in the face of falling risk prices and increasing competition.
In the latest version of its rolling three-year plan, aimed at improving its performance and countering the threat from rival insurance centres such as Bermuda, the 300-year-old market said its focus would be on ensuring its underwriters maintain good performance in worsening market conditions.
"The insurance industry is likely to experience reducing rates and worsening terms and conditions during the plan period, and so a major priority is to work with managing agents to maintain prudent underwriting discipline," Lloyd's said.
Lloyd's said it "will seek assurances that each syndicate operates with a realistic expectation of making an underwriting profit on every business line written".
Since the devastating losses of the 1990s, which brought Lloyd's to the brink of collapse, the market has introduced an oversight system known as the Franchise Board to review and manage the performance of insurers operating there.
Lloyd's reminded participants of the weapons at its disposal to improve the performance of weaker syndicates, if it cannot reach agreement with them on how to remedy the situation.
It has the power to limit the amount of business the syndicate writes, make it buy more reinsurance cover if it feels it is overexposed to a particular disaster, require personnel changes or even stop it from writing business.
Published on December 13, 2007
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