Report highlights franchise strategy efforts to manage market downturn
The Lloyd's franchise board will allow motor and certain personal lines products to be phased out of the market.
This has sparked a debate on how Lloyd's will encourage new companies to enter the market.
According to a report by broker Willis, Lloyd's is embarking on several positive initiatives to manage the downward turn in the cycle.
It is aiming to squeeze out mainstream products such as motor in favour of the specialist risks which play to its reputation.
The report, Lloyd's - Profile and Reality, claims the franchise board has supported brokers and insurers that have developed alternative platforms to carry business which is not suited to the market.
Motor and some personal lines are deemed to be increasingly volatile. Removing them from the market is expected to stabilise the cycle.
"Lloyd's is content to see these [motor and personal lines] leave the market," the report said.
Increasing costs, distributional flexibility and regulatory flexibility has encouraged businesses to look beyond the market to place traditional business, Willis said.
"For some businesses there is an obvious attraction to channelling their personal lines and other simpler business towards their non-Lloyd's platform," the report said.
It adds that the franchise board has conducted "a more careful review" of Lloyd's business earlier in the cycle and this has had a positive impact.
"There may not be so much of the 'flair and entrepreneurship' that characterised earlier eras, but one has grounds to hope that the greater disciplines should deliver a better managed down-cycle," Willis said.
It claims the FSA approves of the market adjusting itself to become increasingly specialised.
The report said Lloyd's could become a "centre of excellence for specialist insurance and reinsurance business."
An increasingly specialised Lloyd's, however, has created a challenge for start-ups wanting to enter the market place.
How Lloyd's chooses to encourage new start-ups to enter the market is regarded as "a real matter for debate".
"It is a generality of our age that smaller scale forms of innovation are finding it harder to take root," Willis said.