In recent years Lloyd's has seen changes to the way it raises its capital and is now opening its doors to non-Lloyd's brokers.
At first sight it may appear to be the end for the traditional Lloyd's broker sub agency divisions and perhaps those who have relied heavily on guarantee business will need to reinvent themselves.
At Miles Smith, whilst we have in the past guaranteed a small number of brokers into Lloyd's, our focus has always been on scheme business and arranging routes into Lloyd's for high-risk commercial and liability business under facilities and schemes for our agents, providing added value in each instance. This is much more than providing a name and fax number for enquiries. Our philosophy is to create real lasting relationships between our agents, ourselves and underwriters, whether the agent is dealing direct with underwriters or on a facultative basis through our broking teams.
Rather than being concerned about the opening of Lloyd's to non-Lloyd's brokers, we see this as a great opportunity especially for those companies that already arrange binders and facilities on behalf of our agents with Lloyd's underwriters and London market offices.
Good supporting agents
As these underwriters and London market offices seek good supporting agents they need help to assist them in arranging such facilities with brokers. It is our belief that these types of partnership deals between brokers, ourselves and underwriters will increase as underwriters seek to expand their broker base with high quality brokers.
The majority of Lloyd's syndicates currently have no systems for marketing and no historic contacts with large numbers of brokers. In the past this role has been filled by the Lloyd's broker.
Whilst some syndicate business will lend itself to marketing to UK agents, in our experience many prefer to have companies like ours handle this for them. Few, if any, syndicates wish to handle agency facility with hundreds of brokers as they do not have the systems or back-up to cope.
Lloyd's is a market little understood by those who have never traded in it. To use it to its full potential general brokers will require the assistance of Lloyd's brokers to develop relationships and product support with underwriters.
It is important to remember that Lloyd's and its appointed brokers have always had a very close relationship and the broker plays an important role in the marketing, sales, issue of documentation and claims assistance. Such close relationships will not change overnight.
The largest part of our sub-broking activities surrounds the placing of risks on an individual basis under binders and facilities and much of this falls under our schemes.
Scheme business has always been a strong area for Miles Smith, which acts for some 30 trade associations, and scheme underwriting is a strong area for Lloyd's underwriters.
Unlike the composites, Lloyd's syndicates as a whole do not have teams of people to develop new products. The impetus and ideas and often the wordings for such schemes usually come from the broker who identifies a need in the market.
Lloyd's trade fairs are a useful sounding board.
But, of course, in the final analysis the consumer knows best.
Whether it be through direct facilities or sub broking, the amount of business we place with various Lloyd's underwriters and London market offices provides us with a position to place cases and obtain terms for our agents which otherwise may not be available.
As the market starts to harden on UK commercial business this puts us and our agents in a very strong position.
In summary, as Lloyd's looks to open its doors to new broking opportunities we feel the way ahead is an expansion of our current partnership philosophy in assisting our agents to make the most of the Lloyd's and London markets and to promote the markets which we support to bring enhanced business potential to our network of supporting underwriters.
These partnerships will become increasingly important as the market hardens and the number of composite insurers reduces through wages.
Schemes and facilities are in our view the way forward, and Lloyd's and the Lloyd's broker system lends itself well to this type of business.
The future is full of new opportunities in the Lloyd's market.
