Six initiatives lie at the heart of the Future at Lloyd’s, the plan which outlines chief executive John Neal’s vision to develop a renewed environment that attracts the capital, products and efficiencies that are crucial in driving the transformation the market needs.
Attracting new capital is a key initiative that will increase both competition and product innovation; while delivering greater value to customers by enhancing existing coverage and protecting against new and emerging risks. At the same time, the ‘Syndicate-in-a-Box’ (SIAB) initiative promises a streamlined entry process – not just for new, innovative syndicates but also for managing general agencies (MGAs) who see Lloyd’s as the ideal platform to enable faster growth through diversification, wider distribution and reduced reliance on third party capacity.
Lloyd’s presents its six proposals through personas – fictional characters that demonstrate how an individual might be attracted to the Future at Lloyd’s.
‘The Syndicate-in-a-Box model means I can buy centralised services from other market participants or third-party providers that my company can’t or doesn’t want to carry out – functions like HR, payroll, reporting and claims,’ the prospectus explains. ‘As we grow, we can outsource more of these services, or bring them in-house as we want. Everyone benefits from these lower costs – not least customers, who see better premiums as a result.’
In this scenario, the speaker is the head of a ‘US-based provider of specialist cyber insurance’whose traditional access to Lloyd’s would have been via an MGA coverholder agreement. The SIAB proposal means that this would-be MGA and others like them that are already established, can quickly access the Lloyd’s platform and launch a small-scale, cost-effective syndicate from day one.
The benefits will be significant: Lloyd’s global footprint means both wider distribution and greater scalability. The ability for SIABs to operate remotely and use cutting-edge technology to automate processes will significantly reduce the cost of doing business. The use of own capital to provide all or part of the funds for underwriting means greater control over capacity, and the versatility to diversify into other classes of business or new and emerging risks. Combining all of this with good third-party management creates a powerful proposition, enabling MGAs to realise their growth strategy, minimise costs and take a greater share in underwriting profits.
Asta is already working proactively with Lloyd’s to develop a streamlined gateway for new capital and fast-tracked access for new entrants. Asta is also designing a tailored and cost-effective package of services that supports SIABs during their start-up phase and beyond. Wherever they are in their lifecycle, building in-house functions such as actuarial, compliance and risk management is expensive and time-consuming. For the model to succeed, these costs must be kept to a minimum while ensuring that underwriting oversight and corporate governance is maintained to the standard demanded by both Lloyd’s and regulators. This leaves the business free to focus on their strengths of underwriting, product innovation and distribution.
There are immediate and considerable challenges facing Lloyd’s and time will tell whether the Future at Lloyd’s proposals will deliver the transformation needed to restore its reputation as the world’s leading specialist insurance market.
The SIAB initiative is however, a big and positive step in the right direction and one that could truly transform the underwriting landscape at Lloyd’s. MGAs can now bring their own capital to the table and with the right third-party management support enabling them to “plug and play” their own syndicate, together they can make a significant contribution to the Future at Lloyd’s.
Keith Nevett is Head of Business Development at Asta.
This article was originally published by Insurance Day on 10thSeptember 2019 and has been reproduced here with their kind permission