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Lloyd’s mandates electronic placement for 80% of risks bound

29th January 2020 - Author: Luke Gallin

The Lloyd’s of London insurance and reinsurance marketplace has announced an update to the Electronic Placement Mandate, increasing the target on risks bound for each quarter of 2020 to 80%.

lloyd'sThe specialist Lloyd’s re/insurance marketplace introduced a mandate for electronic placement for syndicates in 2018. Initially, and from Q2 2018, the mandate required all syndicates to write at least 10% of their risks electronically, rising to 20% in Q3 and 30% in Q4.

In July of last year, Lloyd’s outlined a set of updated targets for its electronic placement mandate, which meant that from the third-quarter of 2019, each syndicate will be required to have written no less than 60% of its risks using a recognised electronic placement system, with the target rising to 70% in Q4.

Now, the marketplace has again increased the target, noting that with effect from January 1st, 2020, the Electronic Placement Mandate has been amended to include targets on risks bound for Q1 2020 is increased to 80%. At the same time, the target for Q2, Q3, and Q4 2020 are to remain at 80%.

Lloyd’s also provides some updates on fine and rebates, noting that fines are not applied if >70% is achieved, and rebates are not given in <80% achieved, meaning that rebates are given if more than 80% is achieved and fines are applied if <70% is achieved.

Regarding submissions/quotes, and the Lloyd’s market reveals that it is to maintain existing basis of measurement for the first-quarter of 2020 and hold at 15%. Adding that it will review Q4 2019 performance and Placing Platform Limited (PPL) statistics for the first two months of 2020 prior to confirming targets for Q2 2020 and beyond.

Lloyd’s announced throughout 2019 that the adoption of PPL was on the rise.

However, and as we’ve said previously, it’s worth remembering that it’s uncertain exactly how much business is actually placed into the system at the time of transacting, versus backfilled after a transaction has already taken place.

Market sources have suggested that some Lloyd’s players use PPL as a filing system of sorts, with staff specifically tasked with putting deals done into the system.

In light of this, it’s challenging to understand the true impact of PPL, in terms of market efficiency, as syndicates could be motivated more by the targets they have to meet than in embracing electronic placement out of choice.

This raises the question of how much this is being used as actual electronic tool at the time of placement, or more of a filing system for after a transaction has taken place.

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