Lloyd’s CEO Beale reveals new oversight strategy, market to shrink in 2017/2018

Lloyd’s CEO Inga Beale has detailed a new oversight approach in her June 26 half-yearly market briefing and plans for a 10 percent headcount reduction.

A new risk-based approach to syndicate oversight being implemented by director of performance management Jon Hancock will result in fewer minimum standards reviews, while focusing on high-impact areas, and having fewer portfolio review classes, but ones with greater premium coverage and that have performed worse recently, Beale explained.

“We will spend more time helping underperforming syndicates improve underwriting performance while leaving the good performers to get on with running their successful businesses,” Beale said.

To protect the Central Fund in the current challenging environment, Lloyd’s syndicate oversight activity is focusing on all elements of combined ratio, rather than almost exclusively on loss ratios, she explained.

Given current conditions, improved performance means the market should shrink in 2017 and 2018 as underwriters maintain strong discipline, Beale noted.

Managing agents and brokers need to look at ways to reduce internal costs and work more efficiently; adopting London Market Target Operating Model (TOM) initiatives will help reduce market-wide costs over time, Beale said.

Regarding acquisition costs, the oversight team has been collecting data from managing agents, and once they have completed the analysis will be working on possible next steps as to how each of you can reduce costs over the entire value chain.

“We expect to see the new oversight focus I have outlined above reflected in managing agents’ 2018 plans,” Beale said.

At the same time, Lloyd’s plans to reduce the headcount by around 10 percent. “We are seeking to minimise the impact on our people by opening up a voluntary severance programme and through re-deployment within the organisation,” Beale noted.

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