Last October Lloyd’s produced a working document entitled “Developing Broker Relationships,” which proposed sweeping changes in the accreditation and regulation of Lloyd’s brokers.
Now the results of that study have been announced, and major changes will be in place as of January 1, 2001. For the first time the Lloyd’s market in London will be open to overseas brokers, who can thus place business directly with Lloyd’s syndicates without going through a British Lloyd’s broker.
In place of the regulations adopted in the 1980’s Lloyd’s has adopted a system, which requires all brokers to meet the standards of the General Insurance Standards Council (GISC), and the accreditation criteria established by Lloyd’s. Brokers, principally those in Europe and North America, will therefore be on an equal footing with their U.K. peers.
The change was urgently needed as the former principles were “widely regarded to have been overtaken by a number of developments, for example, the creation of the GISC, e-commerce and the globalisation of the insurance industry.”
“Our aim is to create global access while maintaining the high standards our customers have come to expect from Lloyd’s brokers”, said Chairman Max Taylor. “We also want to give Lloyd’s-based business the freedom to select business partners based on commercial rather than regulatory criteria.”
As of July 3, “all existing Lloyd’s brokers will be required to become members of the GISC. Umbrella brokers — non-Lloyd’s brokers who have a contractual relationship with a Lloyd’s broker – will also be given the opportunity to become full Lloyd’s brokers from this date if they join the GISC.
Originally Lloyd’s had suggested the creation of two new classes of broker -Full Access Intermediaries, and Sponsored Intermediaries. According to Lloyd’s spokeswoman, Sarah Pelling, “These ideas were dropped, and every broker, who meets the criteria will be a ‘Lloyd’s broker.'”
The expected result of the changes will be to bring the Lloyd’s market more in step with global commercial imperatives. A comment, offered by Grahame Chilton, Chief Executive of Benfield Greig Group plc. summed up the changes as follows: “Lloyd’s reliance on a single distribution channel for most of its business puts it out of step with many of its competitors. Our own experience with Benfield Greig Interactive, which creates and manages trading web-sites for underwriters, shows that opening up e-commerce distribution channels generates significant new business. Removing the barriers at Lloyd’s will make it easier for Lloyd’s businesses to exploit these opportunities, welcome to the real world.”
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