The Lloyd’s Market Association (LMA) is calling for the administrative burden on motor and other personal lines insurers to be reduced in order to maintain the competitiveness of Lloyd’s.
The LMA set up a working party in March to look at the costs of conducting personal lines business at Lloyd’s. This came amid concerns that Lloyd’s was not an attractive market for motor and other low-risk classes of business, given the emergence of low cost venues such as Gibraltar.
As a result of its work the LMA will now be calling for Lloyd’s to cut the reporting requirements for low-risk business. But it said the case for reducing capital requirements and central fund contributions was less compelling.
A spokesman said: “While providing feedback to this project on behalf of all its members, the LMA will specifically be seeking to reduce the reporting requirements for lower-risk business classes such as UK motor.”
“The working party also concluded that there was a less strong case for seeking further reductions in capital requirements and central fund contributions given recent steps by the corporation to address these issues both for motor business and the market more generally.”
Personal lines insurers at Lloyd’s already benefit from a reduced capital requirement compared to other syndicates, but it is still 9% higher than the rate charged to those operating in Gibraltar.
News that Equity Red Star, which has a 50% share in the Lloyd’s motor market, intends to transfer around £50m of business to its Advantage operations in Gibraltar, has added to concerns.
Chris Dixon, divisional underwriting and development director at Chaucer, said: “If [Equity] makes the decision to exit the Lloyd’s market, the size of the market could go down to around 3.5%. At its peak it was around 13% to 15%.
“We are currently in a stable market, but if anyone exits then it will impact,” he added.
Lloyd’s insisted that personal lines business remained an important component of the market’s overall portfolio. A spokesman added: “Lloyd’s would like to see motor business either to remain the same size as it is now or to grow.”
At its peak there were more than 40 motor syndicates at Lloyd’s. That number has fallen to eight in 2007 with departures including Highway, Link & Zenith.
In 2007 Lloyd's gross written premium (GWP) for motor in the UK and overseas rose to £1.3m, up slightly from £1m GWP in 2006.