Lloyd’s spent six months canvassing the London Market in how it uses and accesses Lloyd’s in the run-up to the manifesto launch 

Lloyd’s of London revealed a new strategy at the beginning of May with the publication of its manifesto “The Future of Lloyd’s” as it opened its doors to MGAs.

Under one of the six options to revolutionise the market – Lloyd’s Risk Exchange will allow MGAs to create and offer a series of standard products that can be accessed by brokers electronically on the exchange for those products backed by the Central Fund.

Charles Manchester, chairman of the MGAA and chief executive of Manchester Underwriting, said MGAs can already write Lloyd’s lines on London Market slips using 9000 series stamps, so it was right that MGAs should be allowed boxes in the underwriting room. 

“Some MGAs have occupied offices in the Lloyd’s building already so it’s a perfectly reasonable thought that they could have boxes in the underwriting room, although the rent wouldn’t be cheap.

”The key issue with MGAs – as ever – is how much value the MGA adds. I’m sure that Lloyd’s would be supportive of any reasonable suggestion that enables more profitable business to be written.”

Significant step

Chris Butcher, chief executive of intermediary services at Davies Insurance Services, believes the news will drive the attraction of MGAs and with it the Lloyd’s syndicates that will support them.

He explained: “This is a significant step for the market and is one that makes real sense. With a growing percentage of Lloyd’s underwriting now delivered by MGAs and cover-holders to enable MGAs to benefit from greater access to the Lloyd’s platform, it will help the market become more responsive and drive innovation.

“MGAs provide the ability for underwriters to focus capacity on new and innovative risks and products in a structured way and are a home for industry experts who have a market-leading knowledge of their class of business and often a significant client base built over many years with either a carrier or a broker.”

Butcher said that access to the Lloyd’s platform in their own right will provide MGAs with a significant advantage and it is likely that the move will see a rise in the interest in forming an MGA, with a Lloyd’s focus.

“With a long track record for the support of MGAs throughout the start-up process we are aware of the issues they face and also the opportunities that will come from Lloyd’s proposals for the future,” he added.

Opportunity and engagement

The proposals have also been welcomed by Gerry Sheehy, chief executive at Leeds-based specialty MGA, Fiducia, seeing it as an opportunity to work with capacity providers on the Lloyd’s platform to create new products and engage with clients.

He said: “The insurance market is still highly competitive and there remains a great deal of movement in terms of the commitment and withdrawal of capacity in many specialty lines.

“MGAs have the advantage of allowing syndicates to target capacity and bring new products to market faster and more efficiently. I do not think there is anyone in the market who would not echo John Neal’s aim to enhance innovation, drive efficiency and reduce the cost of doing business. Creating distribution for those Lloyd’s Syndicates to brokers that Lloyd’s would otherwise not have access to is where MGA’s can assist in expanding the Lloyd’s foothold into the provincial UK market.

“As an MGA we will be talking with our capacity providers to explore where we can take advantage of the new opportunities when Lloyd’s starts to implement the changes after the consultation period,” he added. “We will also be talking to our broker partners to see what they would like from us.”

Broker access as key to market future

Steve Goate, director of intermediary services at Davies Insurance Services said the plans laid out by Lloyd’s chief executive John Neal will open the market to new distribution channels.

Under the scheme a risk exchange is being created to allow brokers to access a range of defined standardised products with the exchange using technology to offer the most suitable policy on a series of rating and underwriting criteria.

Goate continued: “The aim of Lloyd’s was to reduce costs and provide access to new clients to the market and its capacity. We have long said that regional and retail brokers need to be given better access to the Lloyd’s market. A greater use of technology and the will to encourage syndicates to deliver products in a more simplified and efficient manner will open the market to brokers and intermediaries who at present have not considered Lloyd’s as an option.

“Wholesale and speciality brokers will continue to be the foundation for the market but steps to allow brokers more direct access to syndicate capacity have to be applauded.

“We have been working with retail and regional brokers to enable faster and more cost-effective access to Lloyd’s for many years, and we can only see the blueprint for the future announced today enhancing those efforts.”

Common objective

Chris Croft, chief executive at the London and International Insurance Brokers’ Association (LIIBA), said that it shares a “common central objective” with Lloyd’s approach.

He explained that “a strong, vibrant, innovative Lloyd’s market must be a key part of the offering we make to our clients.”

“The ability to find cover for clients that is simply not available elsewhere has always been at the heart of London’s unique offering. We must ensure it retains and grows that ability, and we look forward to discussing what happens next,” he added.

Promising ideas

Greg Case, chief executive at Aon commended Lloyd’s for taking a leadership position on this issue. He added: “Every nation, every business and every community has never faced greater risk and greater volatility than they do today. In publishing this prospectus Lloyd’s has identified promising ideas to develop innovative solutions that will allow the insurance sector to move more quickly, at far less cost and in a way that helps all involved address today’s greatest risks. We know that risks will continue to evolve. I also know that, working together, our sector will adapt and remain relevant to our clients today and in the years to come.”

Bronek Masojada, chief executive at Hiscox, concluded that these initiatives remind us of “Lloyd’s centrality to the global insurance market and its determination to remain central” to it as the world evolves.

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