Insurance and reinsurance marketplace Lloyd’s of London has laid out its process for agreeing 2021 business plans and capital requirements, which it says now reflect the challenges posed by COVID-19.
The approval process for business plans will involve a three-tiered approach, following on from the pilot of Lloyd’s ‘Light Touch’ approach for its strongest performing syndicates.
These syndicates will have a ‘file and use’ approach to planning, which will also extend to other syndicate plans that are submitted in line with defined key performance indicators.
Where syndicates do not meet the defined KPI criteria, they will follow the normal Capital and Planning Group (CPG) process.
There will be no change in our approach for so-called ‘High Touch syndicates,” and plans will continue to be reviewed in full and must be approved by CPG.
Lloyd’s will also be piloting a fast track approach for 2021, which aims to build confidence in models prior to submission and to reduce the level of review required during the CPG process.
All syndicates, regardless of fast track status, will still be considered for capital appropriateness based on their catastrophe risk appetite, appropriateness of prospective loss ratios and opening balance sheet reserves.
Engagement with managing agents will commence from early July and every managing agent will meet with Lloyd’s representatives, led by Lloyd’s oversight managers, with support from technical teams.
High Touch syndicates will continue with full strategic business discussions to give managing agents the opportunity to present their business plan, evolution of capital in light of risk profile and 3-year plan activities to Lloyd’s.
Meanwhile, all other syndicates, including those in the Light Touch category, we will have a 30-minute plan check-in meeting, also led by oversight managers.
Written feedback will be provided to each syndicate following the discussions, which will state Lloyd’s’ view of the plan, capital, reserves and other areas for consideration.