The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) have launched a consultation proposing measures to boost diversity and inclusion to support healthy work cultures, reduce groupthink and unlock talent.

Lloyd’s CEO John Neal has said he expects to sign off on business plans allowing the market to grow by between 12% and 13% in 2021 and write up to $15bn of new business.

The CEO was speaking as part of Aon’s fireside chat series of interviews with top (re)insurance executives.

Neal also said he was confident the market would perform within expectations in 2021, and there was scope for growing both exposure and pricing.

The overall growth forecast is an upwards revision of a recent prediction Neal made of high-single-digit growth next year, though the new business forecast is at the low end of a £12bn-£13bn ($15.5bn-$16.8bn) range he previously cited. The comments come as the business planning process continues between Lloyd’s and syndicates.

Lloyd’s gross written premium in 2019 was £35.9bn.

Neal added that the Covid-19 pandemic had enhanced the importance of Lloyd’s physical presence.

“I think the physical location has perversely become more important, not because we can’t trade without it, but because that ability to connect in certain circumstances and certain instances is critical,” he explained

“And as real estate footprints reduce in the major cities, I think having a legitimate location where people can meet for the purposes of doing insurance has just gone up actually.”

The Lloyd’s leader noted that the insurance industry had got off to a “slow start” at the beginning of the pandemic and found itself on the back foot in the media.

“We found ourselves in a similar position I think the banks did in the financial crisis, people feeling disappointed or frustrated that either there wasn’t cover in force or that they thought there might have been cover but the cover wasn’t there,” he said.

He commented that the pandemic experience had proved a “wake up call” for insurers to consider protecting intangible assets on companies’ balance sheets.

Quizzed on broker consolidation, Neal said he thought Aon and Willis Towers Watson would flourish following their merger and improve the broking market.

“I think it will lift the standards and that must be net net good,” Neal said.

Lloyd’s has announced a target of 35% female representation in leadership positions as it seeks to fulfil its commitment to driving long-term culture change in the market.

The 35% target applies to the Lloyd’s market, and within that to company boards, executive committees and direct reports to the executive committee. It is expected to be achieved by 31 December 2023.  

In addition, boards and executive committees combined will be expected to achieve at least 20% female representation by the end of 2023. All new market entrants will be expected to meet these targets on arrival. 

Lloyd’s said it would also set a target for market ethnicity in Q2 2021, following extensive collection of ethnicity data in the market to determine a starting point.  

Lloyd’s today additionally published its culture dashboard, which provides a snapshot of the demographic make-up of the market, informed by the Lloyd’s culture survey last year as well as market participant data across key demographic characteristics.

The dashboard was one of five action points Lloyd’s announced in March last year following a Bloomberg article that reported instances of sexual harassment in the Lloyd’s market, citing anonymous female sources.

The dashboard shows that women currently hold 29% of leadership roles as defined above.  

However, there are still 12 firms with all-male boards and 12 with all-male executive committees.  

Out of this group, seven firms have all-male board and executive committee teams combined. One firm has all-male direct reports of the executive committee. 

Within the Lloyd’s Corporation, women fill 47% of leadership roles.

“The market [female representation] target will drive an improvement in the gender balance in leadership roles across the market in the short-term, with Lloyd’s committing to a medium-term ambition for parity over the next decade,” Lloyd’s said.

Other findings from the culture dashboard include that 88% of the market identifies as heterosexual, with 2% as lesbian or gay and 1% as bisexual. Around 8% preferred not to say.

Meanwhile, just 4% of the market have a disability, while 91% are able-bodied and 5% preferred not to say.

Lloyd’s CEO John Neal said: “Last year, we committed to building a much more inclusive market – one that we are all deeply proud to be part of, and one that welcomes and represents the diversity of our customers globally. In the Corporation, we have achieved parity in less than two years and we are all the better for it.

“While we have put in place a series of actions to accelerate change, it is abundantly clear that we have much work to do and we must be impatient in our resolve to get there. The Corporation will continue to do more in leading the market on all aspects of inclusion.”

Lloyd’s CEO John Neal has said repricing “has to happen” following the substantial industry losses from Covid-19, and pledged flexibility in permitting additional growth to the market as rates rise. 

This morning, Lloyd’s released an industry underwriting loss estimate of $107bn for Covid-19. When including the expected hit to investments, this total industry impact rises to $203bn, Lloyd’s said.

The Lloyd’s market is expected to take $3bn-$4.3bn of the Covid-19 underwriting losses.

Speaking to Insurance Insider, Neal said: “You can’t put a potential $200bn loss into the non-life insurance industry and not expect the market to reprice.”

He added: “I hope we will learn from experiences of the past, whether that was 9/11 or another event, and realise that this has to be a significant pricing event.”

The Lloyd’s CEO said the Corporation would be as accommodating as it reasonably can be in permitting syndicates to grow in a hardening market.

Lloyd’s performance management directorate has been tough on growth in the past two years as it has sought to rectify market performance, a process which is still ongoing. The market has previously complained that Lloyd’s would not allow it to grow ahead of risk-adjusted rate.

“If there is growth that’s price-driven we will be very quick to support that,” Neal told this publication.

He said that Lloyd’s would do as much as it could to approve business plans quickly and simply, and “there would be forgiveness if the right opportunities are there within your plan to grow”.

The light-touch cohort of outperformers will gain automatic plan approval and therefore freedom to grow.

Neal said those which are not light touch, Lloyd’s had revamped the standard approach to business planning around some KPIs. Provided the plans are credible, and there is clear demonstration of how managing agents got to their forecasted loss picks, “we can fast track those approvals”, Neal said.

“I think the vast majority of syndicates will fall into those two buckets. If plans are sensibly constructed they will be approved,” Neal said. “But there is a third bucket, the high-touch syndicates, and if they have been a problem it will be a difficult set of discussions.”

The high-touch cohort is made up of both underperforming syndicates and those which are deemed material to the market – either due to their size or cat exposure. Lloyd’s 2020 planning documentation shows the high-touch cohort has around 20 syndicates and accounts for around 45 percent of market premium.

Lloyd’s will also be accommodating to new capital wishing to support Lloyd’s businesses as the market enters a period of opportunity, Neal said.

He pointed to the two new Lloyd’s entrants recently approved – Carbon and Ki – and said the syndicate in a box framework was generating steady levels of interest.

“Our ILS work continues, so there is no reason why that alternative capital shouldn’t come in,” he said. “There is still interest from those not yet participating in the market, who are thinking about when entry to Lloyds is the right time.

“As difficult as this pandemic is for our customers, and how devastating the broad impact has been, there is an opportunity for insurers.”

Lloyd’s is extremely well capitalised and will be able to shoulder the cost of Covid-19, Neal said, noting that the twice-yearly recapitalisation opportunities at Lloyd’s meant the market should also be able to bolster capital before the peak US wind season.

Neal also warned that the Covid-19 impact would drag out over a number of years, with the first year creating a catastrophe-type loss, then the effects of recession being felt on premium income in the following years.

“We have also got to keep a really strong eye on inflation probably for two years out,” Neal said. “I think our businesses at Lloyd’s have learned that we have got to adjust price to keep pace with the recessionary and inflationary impact that will echo through 2021 and 2022.”

Inquiry found rules to be “riddled with problems, unfairness and unintended consequences… the potential impact on the wider labour market has been overlooked by the government. A wholesale reform of IR35 is required.”

The report is critical of “numerous flaws” that “treats contractors as employees for tax purposes but do not qualify for employment rights, thus creating a class of zero-rights employees” and “places too great a burden on businesses”.

Summary of Lords Inquiry

It is right that everyone should pay their fair share of tax. But the evidence that we heard over the course of our inquiry suggests that the IR35 rules—the Government’s framework to tackle tax avoidance by those in ‘disguised employment’—have never worked satisfactorily, throughout the whole of their 20-year history. We therefore conclude that this framework is flawed.

Until the beginning of the COVID-19 pandemic, the Government had planned to extend off‑payroll working rules to the private sector in April 2020. The off‑payroll working rules build on IR35, and the new proposals were designed to mirror similar rules implemented in the public sector in 2017. Under the new rules IR35 itself will not change. Instead, large- and medium-sized businesses will be responsible for enforcing a regime which HMRC has struggled with.

The Government’s aim was to legislate for the new private sector rules in this year’s Finance Bill. But following the COVID-19 outbreak, and the Government’s assessment that introducing new rules was inappropriate at an extremely difficult time for the economy, the implementation of the rules will be deferred for a year.

We welcome this delay. It is right not to impose unnecessary burdens on business at such a difficult time. However, given the dysfunctionality of the existing system, we call on the Government to use the extra time to rethink fundamentally its approach to the legislation. We understand why, in order to improve compliance and protect the tax base, transferring responsibility for operating the rules to clients was deemed a remedy for the problems which have beset IR35. But the Government made this decision after considering the issue too narrowly, in terms of its tax take. It has severely underestimated the costs to business of implementing the changes. It did not take full account of concerns raised by stakeholders. And it did not analyse sufficiently the unintended behavioural consequences of the proposed reforms or their wider potential impact on the labour market, and on the gig economy in particular.

It is likely that the off‑payroll changes will cause widespread disruption. Many of our witnesses described how the proposals had already encouraged blanket status determinations and the early termination of contracts. We also heard that many contractors had been left in an undesirable ‘halfway house’: they do not enjoy the rights that come with employment, yet they are considered employees for tax purposes. In short, they are “zero-rights employees”. Separating employment status for tax purposes from employment status under employment law also fails to acknowledge that contractors bear all the risk for providing the workforce flexibility from which both parties benefit.

The Government should therefore take the opportunity afforded by the delay to analyse holistically the problems that we have uncovered. If the Government continues with its plan to introduce the off‑payroll reforms in April 2021, it should commission an independent review of the earlier introduction of the off‑payroll rules in the public sector to analyse how introducing off‑payroll rules to the private sector will affect the labour market. It should also, after two years of promising to do so, finally implement the recommendations of the Taylor Review of modern working practices: that the taxation of labour should be made more consistent across different forms of employment, while at the same time improving the rights and entitlements of self-employed people. We believe that the Taylor Review proposals offer the best long-term alternative solution to the off‑payroll rules, and provide an opportunity to consider tax, rights and risk together.

The UK economy is facing its most severe crisis since the Second World War. Even if the economy were to begin to recover in the next 12 months, the severity of the economic impact of COVID-19 is so great that it would be completely wrong for the Government to impose a new burden on business in the form of the existing off‑payroll proposals. However, business is likely to need considerably longer than a year to recover from the disruption caused by the COVID-19 pandemic. The Government should announce by October 2020 whether it will indeed implement the off‑payroll rules in April 2021, or whether any on-going impact to the economy resulting from the COVID-19 pandemic will require their implementation to be delayed further. In the longer term the Government should reassess the flawed IR35 framework, and give serious consideration to the fairer alternatives to the off‑payroll working rules which we lay out in this report.

The government has confirmed it will proceed with the planned extension of off-payroll rules into the private sector from April.

The confirmation came in a report from Treasury published this morning into the review of the implementation of the extension off-payroll working rules into the private sector.

However, having listened to stakeholders the government also revealed it is making a number of changes to address concerns, and support the smooth and successful implementation of the reform.

These include:

• Customers will not face penalties for errors relating to off-payroll in the first year – barring cases of deliberate non-compliance 
• HMRC has reaffirmed that information resulting from changes to the rules will not be used to open new investigations into Personal Service Companies (PSCs) for tax years before 6 April 2020, unless there is reason to suspect fraud or criminal behaviour
• The government reaffirms the rules will only apply to services carried out from 6 April 2020 onwards
• The government will legally require clients to respond to a request for information about their size from the agency or worker, and update the legislation to address concerns raised over the rules as they apply to off-shore companies.

While HMRC has already published detailed guidance on the reform and clarified the position on a range of concerns raised – for example, the client-led status disagreement process, including by making explicit the time limits within which a disagreement can be raised – the Employment Status Manual guidance has been further updated in line with other outcomes from the review. 

Although HMRC has already published a factsheet to support contractors prepare for the changes, and are continuing to step up their communications in the run-up to implementation, it will launch further products to support contractors in understanding the changes, including a self-help guide on how to spot tax avoidance schemes.

Government further committed to continue to listen to stakeholders, and monitor and evaluate the operation of the rules, while HMRC is to commission external research into the impacts of the reform six months after implementation, including on how status assessments are being made.

Commenting on today’s development, Samantha Hurley, director of operations at APSCo and co-chair of the government’s IR35 Forum, said the association’s members will welcome the extra time to adjust that the promised ‘soft landing’ offers.  

“When the review into implementation was launched last month, APSCo made it very clear that we were not seeking a complete delay to implementation, but a period of time within which recruitment businesses and end clients wouldn’t be penalised. This was communicated directly to HMRC and other stakeholders, and we are extremely pleased this recommendation has been listened to and taken on board by the government.

“HMRC has long maintained that it genuinely wants businesses to comply with the new rules and that there will be no witch hunt – and this latest move suggests this may truly be the case. The fact that it has also published additional guidance to educate the supply chain is welcomed by APSCo.

“In addition, policy changes announced today also offer much needed clarity for our members. The fact that all businesses now have a statutory obligation to confirm whether or not they are ‘small’ takes the onus off others in the supply chain, while confirmation on the timeline for disputes is also welcomed. Many of our members will be particularly relieved that the rules will no longer apply to clients based wholly overseas, with the obligation to determine tax status in these instances moving back to the contractor.

“While there is no escaping the fact that the extension of off-payroll rules is not ideal, overall, this is a significant win for the professional recruitment sector and I’d like to thank all of our members who got involved, shared their experiences and contributed to this outcome.”

Sophie Wingfield, director of policy at the Recruitment & Employment Confederation, said: “It’s a positive move that the Treasury is putting the obligation on small businesses to declare whether the IR35 rules apply to them. This is a direct response to what the REC has been calling for and should provide recruitment businesses with much needed clarity on their obligations.”

In relation to the decision by HMRC to take a ‘light touch’ approach to enforcement, Wingfield added: “Taking a ‘light touch’ approach to enforcement in the first year will create more problems than it solves. The consequences of not complying with tax law should be clear. Not doing so could create an unlevel playing field where compliant employers lose out to unethical ones. We need to see more details about how this approach will work in practice. What’s obvious from this is that the Treasury know IR35 is not quite right. Rather than tinkering around the edges of this complex legislation, we need the government to delay implementation until 2021 to make sure it’s done properly.”

While welcoming government’s promise of a soft landing in implementation of the rules, Julia Kermode, CEO of the Freelancer & Contractor Services Association (FCSA), added she is cautious that this may cause more confusion if clients and contractors are misled into thinking that the legislation has been delayed or will not be enforced.
 
“We have confirmed with HMRC that the soft landing is genuine and that penalties won’t ordinarily be applied for the first 12 months of implementing the reforms. This is good news because HMRC’s education programme was delayed due to the general election, so a number of businesses are only finding out about the reforms and their new liabilities now, just weeks before the legislation comes into effect. However, the soft landing does not mean that businesses and individuals can plan to ignore the changes because HMRC has also confirmed that penalties will be applied where there is deliberate non-compliance.

“FCSA also welcomes the clarity regarding overseas clients being out of scope, plus the amendment requiring clients to confirm whether or not they are small so that the supply chain can ascertain if the new off-payroll rules apply.
 
“It has been clear to me for some time that HMRC has been hell bent on planning to implement the off-payroll reforms this April come what may, and the publication of their review clearly shows that these reforms are coming whether we like it or not. I can’t see the budget on 11 March bringing about a U-turn, so it would seem that the House of Lords inquiry into the legislation is the last hope to affect any meaningful change.
 
“Having given evidence to the House of Lords this week, it was clear that they were listening to the various representations, and I did get the distinct impression that they were not supportive of the legislation. Time will tell as to whether or not they can make a difference but, in the meantime, I would strongly urge everyone to prepare for the reforms as penalties will still be issued for deliberate non-compliance.”

Make no mistake, the sudden news that performance management director Jon Hancock is leaving Lloyd’s will send ripples across the London market.

He’s the man who stopped the rot and set the wheels in motion for a more profitable Lloyd’s. At a time when the future for 1 Lime Street looked bleak, he demonstrated that a firm hand and a risk-based approach to regulation could start to rectify the mistakes of the past, albeit slowly.

Lloyd’s had suffered from a crisis of confidence – even John Neal acknowledged when he arrived as CEO that the marketplace had lost its mojo. Restoring positivity in the market has been a big win for the Corporation in recent times, and Hancock’s role across performance and transformation was an important driver of that renewed confidence.

It goes without saying that his exit is a major blow for Lloyd’s, at a time when momentum around performance and strategy was just starting to gain pace.

Lloyd’s is keen to publicly show that there are no hard feelings. The transition will be flexible to suit both parties, they have said. There will be no cliff edge.

Both Neal and Hancock have stressed that this separation is nothing to do with differences of professional opinion – nevertheless market tongues will still wag on whether this departure is really to do with the fact that Hancock’s more measured view of how to implement change was at odds with Neal’s ambition to spark a big bang moment for Lloyd’s.

Departing before he has done four years in the role – and in a critical year for the Lloyd’s transformation work – certainly suggests there is more behind the move than just itchy feet.

When we spoke to him, Hancock stressed a desire to return to the commercial side of insurance, to be challenged in a way that only P&L business accountability can do.

This only works to emphasise a wider challenge that Lloyd’s faces in retaining and keeping the best talent. The best staff are reluctant to work at regulators long term.

Talent retention and turnover of staff has historically been a big issue within the Corporation, even if recently improved sentiment around Lloyd’s puts it in a much better position to recruit a highly credible successor.

The next question for the Corporation is who wants to take on arguably one of the toughest jobs in the global (re)insurance market.

Few individuals impact the performance of such a wide swathe of the market. The performance management director has a remarkable level of influence on both market profitability and pricing dynamics.

For the Corporation, performance is a key pillar of the strategy and it cannot afford to falter now that gains are starting to be made – and particularly with another calendar-year underwriting loss most likely in the pipeline.

Neal has stressed that the tone of performance management will continue with the new recruit, and the standards that Hancock has set will “100 percent” continue.

For the good of the market, this statement must prove to be more than just lip service.

But at the same time, there will not be complete continuity between the new regime and the old. The new performance management director will surely want to make his or her own mark in the role and will not want to live in Hancock’s shadow.

It will be a fine line to tread, while carrying a huge weight of responsibility.

As we have said before, the talent element is crucial to Lloyd’s ability to carry out the transformational change it is targeting.

With much more still to be done, the next performance management director will be one of the most important hires, if not the most important, Lloyd’s has made in recent times.

Anticipation of a harder market and the creation of an unrestricted light-touch cohort of syndicates has resulted in an increase in the aggregate Lloyd’s market stamp capacity of 6.4 percent to £33bn ($43.6bn) for 2020.  

The Insurance Insider’s annual stamp capacity survey found that overall the market is permitted to write £2bn more business for 2020 than this year.

The increase also marks a reversal of the contraction in stamp seen for 2019, when the Lloyd’s performance management directorate’s clampdown had led to the exiting of a number of classes and a tough stance on growth. Stamp for 2020 is also higher than that recorded in the 2018 survey.

Stamp capacity is the amount of sterling business a syndicate is authorised to write in a year of account. For the purposes of this survey, stamp capacity is calculated as gross of reinsurance and net of brokerage.

The measure is not a perfect indicator of the amount of business that syndicates intend to write, with carriers choosing to maintain different amounts of headroom at different points in the cycle. However, it remains a useful proxy for the business the Lloyd’s market expects to write in a given year.

This publication previously reported that planned premium growth for the market in 2020 would be a few points higher than the expected risk-adjusted rate increase of 5 percent.

The top 10 syndicates by stamp capacity also collectively grew their stamp by 8.9 percent to £14.1bn.

The largest syndicate in the market is now Beazley’s flagship Syndicate 2623, which has grown its stamp by 19 percent year on year to £1.9bn for 2020.

Syndicate 2623 is understood to be a light-touch syndicate, one of a group of 15 which are permitted unrestricted growth due to a good track record.

As previously reported, the light-touch cohort of syndicates grew planned premium by 14 percent for 2020, compared to 3 percent for the rest of the market.

Syndicate 2623 has replaced MS Amlin’s Syndicate 2001 as the largest syndicate in the market. In 2019, Syndicate 2001 had a stamp capacity of £1.85bn, but has reduced this by £250mn for 2020 to become the third-largest syndicate with a stamp of £1.6bn.

The de-emption comes after news that MS Amlin would exit nine business lines as part of remediation efforts.

The number of Lloyd’s underwriting entities is steadily falling. 

The closure of a sequence of syndicates – most recently Acappella, Vibe and Pioneer – has been the most prominent cause of that drop. 

But over the last two weeks, developments at Arch-Barbican and China Re-Chaucer have thrown the spotlight on mergers as a driver of the contracting number of underwriting entities. 

Canopius and AmTrust at Lloyd’s were already on this path, along with Hamilton and Pembroke following deals earlier this year. 

The previous situation, with 60 managing agents running around 100 syndicates writing only £35bn ($46bn) of business at a 40 percent expense ratio, was clearly not sustainable. 

Mergers or fold-in acquisitions make a huge amount of sense given current pressures and the potential benefits on offer. 

Most obviously – as demonstrated this week by pending redundancies at Barbican and China Re – the mergers generate cost synergies. 

Where there are two managing agencies, one can be closed down. Two marine teams writing similar subscription books do not need to be retained. Operational staff are also duplicated. 

These cutbacks – often of very expensive staff – can make a dent in the expense ratio. 

But alongside this, there are two further important Lloyd’s merger benefits. 

The first is capital synergies, with complementary books potentially unlocking substantial capital benefits for merged syndicates. 
The second is a kind of escape card on growth. By merging two syndicates, management can ease top-line pressure, creating scope for an axe to be taken to the worst performing parts of each portfolio. 

And there is still lots of remediation work needed to purge the ills of the soft market. 

Following a rocky coming into line process for a number of syndicates, it is reasonable to assume that closures and mergers will continue through 2020. 

As much as it is always sad to see individuals lose their jobs, the firms that are making roles redundant as they pass through integration processes are doing the right thing. 

Because just as there needs to be fewer underwriting entities at Lloyd’s, there also needs to be fewer underwriters. 

Headcount in the London market must fall if it is to address its cost problem. And fewer of the people who work for Lloyd’s businesses need to be located in prime EC3 real estate. 

Figures from last week’s Lloyd’s presentation show pretty limited progress on expenses, with admin expenses actually projected to rise 20 bps year on year to 12.5 percent – albeit after an expected 110 bps improvement this year. 

I think these mergers represent one answer to the fundamental question that Lloyd’s is grappling with in so much of its blueprint thinking. 

That question is: how do you maximise the benefits and minimise the challenges of being both many and one? 

There are many different ways into this question. 

But among the crucial benefits of the manifold nature of the market are the capital spread that can be offered to clients, and among the key disadvantages are the duplication of cost – and associated complexity – of having many underwriting businesses appraise then write the same risk. 

The Canopius-AmTrust deal – which saw AmTrust take a mid-teens stake in Canopius and Canopius take on direct management of the merged business – is one model for consolidating underwriting while maintaining a capital spread.

Whether through paper deals or simply in-market sales, M&A is one answer to a fragmented Lloyd’s structure which does not make sense 

But M&A is not the only way to achieve this. The Lloyd’s modernisation plans create scope for other structures which achieve this outcome without shareholder changes. 

New approaches to the way that subscription business is placed, with follow-only syndicates and turbo-charged consortia, open the door to a situation where underwriting work is concentrated in a smaller number of hands, but capital diversity is retained. 

However the market gets there, it needs to find a way to drive to an outcome where regardless of how fractured the capital is on the front end, the number of entities underwriting on the front end must consolidate down. 

Lloyd’s premium growth in 2020 will be heavily skewed towards better-performing syndicates as the Corporation seeks to incentivise the bottom quartile to improve performance and push the whole market towards more robust profitability. 

The outcome of the 2020 planning process is the strongest signal yet that the reality is matching the rhetoric on differentiated regulation of managing agents.

As this publication reported last week, the performance management directorate (PMD) has permitted a measured level of exposure growth for the coming year in the aggregate, with planned premiums a few points higher than the current projected risk-adjusted rate rise of 5 percent.

However, the 15 outperformers in the light-touch cohort – which gain automatic plan approval – will grow significantly more than the rest of the market.

Slides used by the PMD in the presentation show that the light-touch cohort will book 14 percent growth in 2020 planned premium, compared to just 3 percent for the rest of the market.

More than three quarters of light-touch growth will also come from increased exposure, while the rest of the market will actually reduce their exposure by 26 percent and achieve their premium growth via rate increase.

The rest of the market includes the high-touch cohort, which holds around 20 syndicates and accounts for around 45 percent of market premium. It is made up of both underperforming syndicates and those which are deemed material to the market – either due to their size or cat exposure.

The planned premium projections allay fears PMD would prevent syndicates from capitalising on rate momentum after taking a hardline stance last year.

However, it’s clear that only those who tick all the boxes on underwriting and operational excellence, including success against long-term performance standards, can fully embrace the current growth opportunities.

The long-term success of differentiated oversight will depend on how the PMD decides to triage syndicates, and too crude a methodology could risk choking smaller syndicates of the growth they need to underwrite profitably, given the structural expense issues at Lloyd’s. It will also depend upon the light-touch syndicates retaining their discipline now that they are operating with reduced oversight.