Lloyd’s, the world’s oldest insurance and reinsurance market, has released a market bulletin detailing its 2024 business plan and capital approval process and timeline for syndicates, stating that it intends to identify underwriting and exposure challenges early in the syndicate business planning process.
The May 16 bulletin from Peter Montanaro, Market Oversight Director, informed the market of the 2023 process and timelines for the approval of 2024 business plans and capital requirements.
It emphasizes that performance remains Lloyd’s number one priority, emphasizing the importance of syndicates providing evidence that they consider and take into account the risks associated with macro thematic challenges in their plans.
“This will give us confidence in the context of any immediate underwriting and exposure challenges,” the bulletin reads. “This year we will try to identify the areas of focus and level of materiality for the challenge, earlier and more specifically by creating a clear direction during the Syndicate Business Discussions (SBDs) and maintaining consistency in planning process.”
Lloyd’s has adopted a principles-based governance model which it says will enable it to ensure a “fair but differentiated” capital approach and planning process for the 2024 account year.
However, the degree of flexibility that Lloyd’s can afford to syndicates depends on the categorization of a syndicate.
However, the market “will seek to improve the attractiveness of Lloyd’s platform by taking advantage of the opportunities allowed by a framework based on the principles for diversification.”
Lloyd’s syndicates fall under three main categories: Outperforming syndicates; Good and moderate syndicates; and Underperforming and Unacceptable syndicates.
For the first group, which is the strongest performers at Lloyd’s, the approach is to “understand what they intend to do, check that all material strategic or thematic issues have been resolved and verified through SDB engagement , and trust them to plan properly. .”
For non-performing syndicates, Lloyd’s says the “principle-based approach means we focus our review on the area(s) that drive the category’s overall rating and its potential impact on underwriting and capital.”
Syndicates that fall under the good category, will see their review of plans focused on “material issues only as part of a portfolio-based approach,” while plans of moderate syndicates will be reviewed by more detailed.
Regarding those under the bad and unacceptable category, Lloyd explained that they have already had discussions at the Board Level and therefore “need to act strictly within the agreed remediation plans.”
Regardless of the category, however, Lloyd’s intends to join earlier this year as it looks to address any immediate underwriting and exposure challenges.
SBDs will begin in June, with each managing agent meeting with Lloyd’s representatives. Discussions will focus on performance and include syndicates’ goals and ambitions for the 2024 account year, including exploring agent management ambitions for syndicate business classes.
While Lloyd intends to join earlier than last year, it will still adopt a phased approach for the business plan and capital submission for the 2024 capital and planning process.