As more SIABs become operational at Lloyd’s, the concept will come into sharp focus, says Chief Underwriting Officer Simon Norton.

The Lloyd’s syndicate-in-a-box (SIAB) concept will come fully into focus and be tested in 2022 as the early adopters begin to ramp up their operations, according to third-party managing agent Asta.

Speaking to Insurance Day, Simon Norton, said the SIAB framework is beginning to achieve its original objectives, by attracting client types and products that previously would not have regarded the Lloyd’s market as an option.

He said Asta has seen dozens of proposals for SIABs, involving business Lloyd’s would never normally have looked at or clients that would never have looked at Lloyd’s as a way of developing their own business.

Norton said the SIAB concept will be fully tested from the start of 2022, when more companies become operational on their independent SIAB platform with the benefits becoming more evident and encouraging the pipeline further.

“There will be more challenges as the SIAB framework is tested with actual operating entities,” Norton said. “We fully expect there to be some operational issues. However, with each successful launch of a SIAB client both Lloyd’s and Asta become more comfortable with their operating platforms.”

Some of the SIABs approved by Lloyd’s include Beazley’s ESG syndicate 4321, the Oman Insurance Company’s syndicate 2880 on the Lloyd’s Dubai platform, Medical & Commercial International’s medical liability syndicate 1902, Carbon Underwriting’s syndicate 4747 and Munich Re’s syndicate 1840.

The SIAB framework was born from the Future of Lloyd’s project and provides an additional route for underwriting entities to set up in the market.

The framework has a number of advantages for smaller entities that may be trying something new to Lloyd’s. It allows for less complicated business plans in the first instance and provides space for a business to build its franchise at Lloyd’s.

Previously, an entity had to be £75m ($99.1m) to £100m in gross written premium in size to support the decision to start at Lloyd’s. This sometimes precluded smaller operations and ones that were attempting innovative methods of underwriting, distribution or product.

An SIAB uses the Lloyd’s capital model for its time while ‘in the box’, so there is no immediate need to build a capital model. Aside from cost advantages, this allows a client to focus on executing on its business plan. As it progresses building its underwriting portfolio and looks to mature to a syndicate, the full model build is commenced.

As a result of these advantages the SIAB concept is making Lloyd’s more attractive.

Entities that had previously thought the Lloyd’s platform was not an option were now see it as possibility. The SIAB entry point has led Asta to explain the benefits of the Lloyd’s platform to a wider client base.

“The SIAB option provides an opportunity for Lloyd’s to widen its footprint and also allow diverse client types that bring different geographies, products and to foster innovation that previously would not have viewed Lloyd’s as an attractive platform,” Norton said.

There have been challenges, however, and one of the biggest examples of this has been explanation, Norton said.
The SIAB concept has attracted a lot of attention beyond the normal Lloyd’s target audience. This has meant a lot of time has been devoted to explaining Lloyd’s and its advantages to this customer base, Norton continued.

“This was always going to mean the development of a feasible pipeline was going to take time from the initial launch,” Norton said. “Regardless of the route into Lloyd’s, either SIAB or syndicate, the underwriting plan still has to stand scrutiny and be accretive to the Lloyd’s market, in addition to the market standards being maintained.”

A number of the proposals Asta has seen have been a repackaging of former syndicate proposals that do not meet the entry criteria as either a SIAB or a syndicate, Norton noted

Norton underlined there has to be recognition that some of these entities are very new to Lloyd’s – and indeed to London – but there is a mutual benefit in having them on a platform for both parties.

He added there are positive signs the original objective of increasing Lloyd’s footprint by having a simpler operating mechanism to get into the market is working.