Lloyd’s has revealed new measures to facilitate faster response in case of a market turning-event (MTE) as it aims to improve market support with “smarter, stronger” oversight.
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 enabling 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.”
Lloyd’s laid out the key guiding principle for improving its post MTE oversight as maintaining market stability by ensuring it is solvent and liquid for quick payouts of claims to policyholders.
Faster approval of business plans will also minimise the destabilising impact on the wider market of syndicates and members who may fail and have to go into run off after a market turning event by improving management of the run off process.
Lloyd’s said it’s also looking to take a lead with “coordinating interaction and collation of data with key external stakeholders (regulators, governments, rating agencies)” and minimising any duplication.
Under the new guiding principles for MTE response, Lloyd’s is prepared to suspend all other non-essential central activities to focus corporation staff efforts on supporting the market, this will enable the market to respond quickly to new opportunities arising from an MTE, with the oversight needs of existing businesses prioritised over new entrants, where possible.
Hancock continued; “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.”
A market turning-event is an insurable loss so significant it causes a rapid pricing upturn, according to Lloyd’s the last clear market changing event followed the September 2001 World Trade Center attacks, after which rates increases by about 40% across all business classes.
More than half the new reinsurance capital raised globally in the immediate aftermath of 9/11 went to Bermuda.
