June 2017
Lloyd’s CEO Inga Beale has signalled that the Corporation will shift its syndicate oversight activity to focus on all elements of the combined ratio, rather than almost exclusively on the loss ratio.
In a half-yearly circular sent to the market earlier today, Beale said the move was designed to better protect the Central Fund in the current “challenging environment”.
However, at an individual class and aggregate level the Corporation will continue to focus on the loss ratio and downside risk management.
Beale also reiterated previously announced plans to spend more time helping underperforming syndicates to improve their underwriting performance while leaving the good performers to “get on with running their successful businesses”.
On acquisition costs, Beale noted that the Lloyd’s oversight team had collected data from a number of managing agents, and would soon contact the market on the next possible steps to help reduce costs across the entire value chain.
The Lloyd’s CEO also said that while progress against the Corporation’s objectives for 2017 had been “encouraging so far”, the fact that the market was expected to shrink this year and next showed there was still a performance gap to address.
In addition to improving efficiency, cutting costs and maintaining underwriting standards, Beale said that targeted market oversight, innovation and talent would be key to closing this gap.
She went on to reiterate an earlier pledge from the Corporation to conduct fewer minimum standards reviews and focus on high-impact areas, and to have fewer portfolio review classes.
Beale’s letter also detailed the strengthening of Lloyd’s capital position following the issuance of a £300mn ($382mn) Tier II bond and said that “good progress” had been made on the Target Operating Model (Tom).
At present there are 19 brokers and 80 carriers, including six MGAs, signed up for electronic placing, while more than 5,000 risks have been bound across three lines of business.
“We need to maintain this momentum. As new lines of business come online, I would encourage all of you to get on board. The more people use it, the more effective it will be,” she said.
The ability to process claims and premiums electronically had increased the “right first time” rate from 60 percent to more than 90 percent and speeded up the flow of funds to carriers by about 30 days, Beale said.
And next month structured data capture will be tested, which will help carriers reduce data capture costs and improve data accuracy.
Beale also referenced the Corporation Operating Model programme, which includes moving to an account management system for managing agents.
“A pilot scheme with six managing agents of various sizes is currently underway, and we aim to roll out account management to all managing agents by the end of the year,” she said.
