New underwriting director will review syndicates business plans in February
Lloyd’s will not tolerate insurers dumping their bad risks in the market and writing better risks on company paper, new underwriting performance director Tom Bolt told Insurance Times.
Bolt said that there must be a clear distinction agreed with Lloyd’s management about what business is written there.
He explained: “If you have a significant operation outside Lloyd’s, we ask that you have a very clear protocol over what you write inside versus what you write outside, identified, in writing and auditable.”
Asked why insurers felt the need to set up company operations outside the market, Bolt said: “Let’s go back to when they first started: Lloyd’s wasn’t as strong as it is today, so many of them built a life boat outside the main platform and, over time, especially when you have a strong captain, you might begin to think you need to sail somewhere.
“In the US, business is written in most jurisdictions on an admitted basis; we sell excess and surplus lines [cover] that is not admitted. It makes perfect rational sense for them to have an admitted platform, and we are not in the business to do that.”
Bolt, who took over from Rolf Tolle at the beginning of the year, said that he would maintain underwriting discipline in Lloyd’s despite the tough economy and softening reinsurance rates. Lloyd’s is believed to have record capacity of up to £23bn for 2010, but Bolt said he would be reviewing business plans with all syndicates over the last two weeks of February.
He said: “It wouldn’t surprise me if there was a reduction in what people ended up writing relative to what they thought they might, based on the fact that market rates are going down. I expect the business planning to be a dynamic process.”
Bolt warned that Solvency II would be challenging for the market, particularly for smaller firms, and suggested it could lead to an increase in mergers and acquisitions.
He said: “The system was built and designed by big companies in Europe for big companies in Europe.”
Read the full interview: Tom Bolt.