The specialist Lloyd’s of London insurance and reinsurance marketplace, alongside the Board of the Lloyd’s Market Association (LMA), has revealed that the pilot classes for the modernised syndication pilot will be Marine Hull and International Casualty Binders.
The modernised syndication pilot forms part of the Future at Lloyd’s strategy, an ongoing effort by the oldest insurance market in the world to modernise and somewhat reinvent itself in order to remain relevant and competitive in a rapidly changing risk landscape.
The LMA and Lloyd’s state that the modernised syndication pilot will ultimately help to shape future standards for leaders and followers as part of a broader market consultation that is led by the LMA. All classes of business are expected to benefit from leader and follower standards, which serve to improve performance and lower duplication, while at the same time ensure that oversight is proportionate.
The Lloyd’s market undertook in-depth analysis on a wide range of possible classes that could form part of the modernised syndication pilot, which included factors like the performance of the class; the materiality of premium in the class; the number and concentration of leaders and followers and brokers in the class; and the method of placement split within the class.
Following its analysis, Lloyd’s and the LMA Board jointly agreed that the most suitable classes of business for the pilot are both Marine Hull and International Casualty Binders.
Chief Executive Officer (CEO) of the LMA, Sheila Cameron, commented: “We are pleased to have moved forward to the next stage of the modernised syndication initiative by going through a robust analysis of the most appropriate classes for the pilot. We look forward to continuing to work closely with the market on the creation of the leader and follower standards in the Marine Hull and International Casualty Binders classes.”
The LMA and Lloyd’s state that work has commenced on the leader and follower standards within these two classes of business, with market consultation on these standards expected to begin in the coming weeks. The pilot will start in late Q1 / early Q2 2020, and the details will be made available in due course.
Jon Hancock, Lloyd’s Performance Management Director, commented: “The pilot will enable the market to test the principle of modern risk syndication and develop appropriate leader and follower standards, one of the key foundations of the Future at Lloyd’s. Once agreed, the revised lead-follow model will deliver significant benefits including improved standards, cost reductions, more proportionate governance and oversight, and smoother implementation of the Future at Lloyd’s solutions.
“This distinction between leaders and followers should make it easier for brokers to place business at Lloyd’s, and should drive good quality, sustainable underwriting performance and growth.”