’It is about clarity for the policyholders. We will lean heavily on the LMA as this is wording related,’ says chief of market performance
The Lloyd’s market is working to deliver greater clarity on cyber cover as it ramps up its realistic disaster scenarios (RDS).
That is according to chief of market performance Rachel Turk, who revealed that work is being carried out with the Lloyd’s Market Association (LMA) on wordings that will deliver clarity around what is and is not covered in cyber products.
Turk revealed the move as she delivered the marketplace’s Q2 market message, in which she warned that the industry was heading for a pivotal moment in 2027 as the pace of softening becomes a major concern for many.
In her message, Turk singled out cyber and marine as classes which were of concern, with the major issue for the cyber sector being falling rates and the need to ensure clients understand what they were buying and what was covered.
“We have been working with the LMA as they have the expertise in terms of policy wording around cyber cover,” she explained.
“While we are not seeking to become prescriptive, it is a case of if you are shining a light on the issue you tend to get action.
“It is about clarity for the policyholders. We will lean heavily on the LMA as this is wording related.”
Turk also revealed that the market is set to reassess its cyber RDS’ and that “one of the scenarios is being replaced”.
The work is underway, with the likelihood being that the new scenario will be in place by the fourth quarter of the year.
“RDS for cyber are different from those for a major property loss for instance. Cyber is an area of business where the risk vectors are constantly changing,” Turk said.
“What we want is the market to push us when it comes to RDS and work together. In terms of cyber you do not want a static RDS suite.”
Renewals warning
Turk’s message also contained a warning for the market that Lloyd’s would be focusing on how syndicates and managing agents navigate the current cycle.
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Turk explained: “We are at a stage where nuance and subtlety do not benefit any of us. Our performance plan is still on track but the quarter one renewals were brutal.
“Rates are not the issue it is the pace of decline.
“This is really a pivotal moment. When we were discussing the market nine months ago the view was that 2028 would be the pivotal moment for the market, but that will now be 2027.”
Portfolio management is now the market’s major concern and Turk said that those in the market needed to understand the current rating environment and know where to pull back and where to push on.
“All the classes are running on a different dynamic,” she explained. “We are looking at this from an adequacy point of view, not rates, as risks have changed and the world is not a less risky place.
“Every class currently has rate adequacy, but it is the rate of decline which is a cause for concern.”
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