In January, Lloyd's set out its vision to be the "platform of choice" for large and specialist property and casualty risks. The franchise board set out market goals in a three-year strategic plan to make sure that, with increasing competition, its powerful global brand was protected and was still seen as an attractive place in which to invest and do business.

Seven months into the project, Insurance Times takes a look at what Lloyd's has achieved so far in five key areas and how that progress is being viewed by the market.

1.Performance framework

What Lloyd's says

  • A framework is now in place for underwriting, claims and risk management standards, which will come into force in January 2007.
  • A risk management toolkit was launched in July to allow the Lloyd's market to understand better the risks and performance potential of their businesses.
  • Work is ongoing to provide "value-added" business information to the market.
  • What the market says
    Ewen Gilmour, chief executive of Chaucer, says: "This is a steady progression of improving the market and the way that it operates. Things are moving in the right direction."

    Jeremy Brazil, director of London underwriting, Markel International, says: "Lloyd's is doing a good job of improving standards in the marketplace and with the involvement of market players in future developments we will no doubt see further promising results. We welcome the introduction of the franchise standards as they can only help establish a well-respected market standard."

    But a senior underwriter spoke with less optimism: "All of the risk management matrices that are being implemented in the market are taking away the point of Lloyd's and stopping the entrepreneurial spirit from prevailing. We have gone from one extreme to the other. Overall, I agree that we should increase standards, but sometimes you wonder whether the civil servants are taking over the government in this place."

    2.Capital framework

    What Lloyd's says

  • Lloyd's eligible assets rules (EARs), which concern investment, have been amended, bringing syndicates broadly in line with the company market.
  • Following consultations, Lloyd's has decided not to introduce differential economic uplifts based on the business written by a syndicate.
  • Lloyd's aims to reduce the central fund contribution rates in 2008.
  • What the market says
    A managing agent source says Lloyd's needs to do more to address the cost of doing business at Lloyd's. "One of the reasons why managing agents are forming insurance companies is due, in part, to the expense of processing business in the Lloyd's market. It is very prescriptive.

    "The big fear is that it is danger of pushing out smaller premium business and becoming a surplus lines catastrophe market as it's just too expensive. They need to address this before we go too far down the road and people say, 'it's too late'."

    Ewen Gilmour says some managing agents want Lloyd's to address the issue of being able to increase their capital resources easily in the next stage of the three-year-plan. "Those of us who own 100% of capital do have the flexibility to meet recommended pre-emption. But as all capital providers have to agree to this, those people who have spread capital want to have more flexibility to increase their capital resources easily and as of yet that has not come in."

    3.Security and ratings

    What Lloyd's says

  • Research has been carried out on the drivers that influence rating agencies. Findings will be presented to the market through updates and one-to-one briefings.
  • Annual rating review meetings have now been held with AM Best, Fitch and S&P.
  • What the market says
    One senior source commented: "Lloyd's doesn't do a bad job when it comes to dealing with security and ratings. One of the great things about doing business in Lloyd's is the infrastructure and the licence to do business virtually anywhere in the world."

    4.Market access

    What Lloyd's says

  • Lloyd's says its is on track to establish an onshore reinsurance presence in China in November and expects to begin trading in early 2007.
  • The franchise board has decided not to pursue US admitted status, beyond existing presence, but will review measures to improve market access to the US excess & surplus lines market.
  • Lloyd's is on track to restructure its global network of offices.
  • It has progressed ways to enhance the global brand through improving, a focused events programme and the development of Lloyd's thought leadership work, which includes its '360 risk project'.
  • What the market says
    Jeremy Brazil said: "Lloyd's is increasingly easing the burden on individual syndicates looking to expand overseas. This has been particularly evident over the past year in regards to opportunities developed in China."

    A senior syndicate figure suggests that those managing agents who wished to write business in "far flung places" should attract a greater levy charge to the central fund.

    "When you go to new areas it is very expensive, it is unknown and it is unchartered territory. So, potentially, Lloyd's could say to those people who decide to go there that they should bear more of the cost than the rest of the market."

    5.Efficient business process

    What Lloyd's says

  • The market reform group is driving the adoption of contract certainty in the market to meet and exceed the 85% target figure for the end of 2006.
  • A pilot is underway to trial a new approach to contract documentation.
  • An electronic claims file repository has been developed and is undergoing testing.
  • An accounting and settlement repository is under development with limited testing.
  • What the market says
    Mark Butterworth, chief operating officer at Liberty Syndicates, says:

    "One of the things that we are all keen to achieve is maintaining the Lloyd's platform. If you are actively looking to do business then cost control and sensible regulation from Lloyd's, as well as continuing to create efficiency and effectiveness, is very important."