London market shake-up could see MGAs underwrite at Lloyd's

Lloyd’s CEO John Neal will unveil the detailed prospectus for the market’s future this week with a proposal for MGAs to be able to underwrite at Lloyd’s expected to be one of the options.

The world’s oldest insurance market has spent six months canvassing the London market on how its uses and accesses Lloyd’s and the Prospectus for the Future at Lloyd’s will be launch on 1 May to senior figures from across the London market.

It is understood that the prospectus will contain six potential changes to the way in which the market operates and each will come with a case study on how Lloyd’s would envisage their operation. There will then be a period of market consultation on the options before the market moves to begin the implementation of the changes that have been backed by the market in September.

The six options were outlined in a preview document launched last month when Lloyd’s announced its annual results.

The first option is to create a complex risk platform that will drive innovation and respond to customer needs. The second is a standardised risk exchange that will speed placement and allow risks to be transacted “at a fraction of today’s cost”. There are plans for a new capital platform that will speed access for new capital to enter the market and “access a diverse set of insurance risks on the Lloyd’s platform”.

There is also a proposal to create a syndicate in a box. This would streamline the ability for syndicates to bring new products to the market. Building in the work undertaken across the London market n process reform the prospectus includes proposals for an automated claims solution to speed settlements.

The final proposal is for an ecosystem of services designed to allow ’all market participants’ to access new products and drive business development.

Sea change

While the headline proposals have been thin on details it is expected that the formal announcement this week, will see details that will signal a sea change to those who can underwrite at Lloyd’s.

Reports in the market say that the plans will include the options for MGAs who are backed by Lloyd’s capacity to be allowed to underwrite through the market.

Whether this will see MGAs operating boxes in the Lloyd’s underwriting room is not clear. However, Lloyd’s head of performance management, John Hancock, told Insurance Times earlier in the month that as far as the market was concerned there was nothing off the table. The proposal for a capital platform that allows new capital into the market makes it clear that Lloyd’s is looking to enable new capacity and products to be accessed and talk that MGAs may be allowed into the underwriting room has been discussed in the market for some months.

Senior manager, media relations at Lloyd’s Nathan Hambrook-Skinner told Insurance Times: “Yes, we have looked at a number of areas where Lloyd’s believes its can better meet the needs of clients.

“The aims of the process include to create easier access for capital to get into the market, encourage a culture of innovation, and reduce the costs to clients of doing business with Lloyd’s.”

“We have undertaken over had 1,000 interviews with stakeholders across the market and a quarter of those interviews have been with customers. We will put the proposals out fir further consultation at will look to have started to deliver on the initiatives by the end of the year.”