Lloyd’s has been urged to call a meeting with the market to resolve growing confusion about its strategy on cycle management.
Speculation has mounted in recent weeks of unrest among senior Lloyd’s figures due to the number of new syndicate entries being authorised by the franchise performance directorate.
Charles Dupplin, director of M&A and a member of the executive group at Hiscox, admitted that he too had expressed concern about one new syndicate, but after explanation felt the directorate’s position was perfectly reasonable.
He told Insurance Times: “It would be helpful if [franchise performance director] Rolf Tolle held a market meeting to clear the air. There is quite a lot of uninformed chatter about.”
Questions have been raised about the directorate’s strategy on growing capacity in a softening market.
In the past 18 months £400m of new capacity has reportedly entered the Lloyd’s market, which includes three new aviation syndicates as well as start-up Ark Syndicate Management.
One senior source said: “The point being made by the grumblers is really about control of capacity and a hope that if capacity is restricted prices will remain hard and they will have less worry about underwriting discipline. The experience of the banking and financial sectors is that if you open your doors to all comers and accept competition, your industry will flourish.”
The entry costs for start-ups has also been the subject of debate, with some market practitioners calling for an increased levy for start-ups.
Currently new entrants pay a 2% contribution to the central fund for the first three years. Established companies pay 1%. This could be reduced further to 0.5% next year.
“This makes a lot of sense as we have all paid special levies in the past to make Lloyd’s strong and desirable,” said a market source.”
A Lloyd’s spokesman said: “Lloyd’s standards for admission are high and we have a rigorous process for admitting new businesses. There are regular meetings with the market and there was a meeting with the CEOs in the market in May. This issue was not raised.”