Lloyd’s has launched a new three-year plan to keep the London market healthy in the face of growing foreign competition, especially from Bermuda. The plan, called the Optimal Platform, outlines a “package of benefits that businesses choosing to operate in the Lloyd’s market will receive in return for the cost of operating on the platform.”
Lloyd’s listed those benefits as follows:
— A clear and transparent performance framework: A performance management framework that supports the achievement of superior operating returns through recognizing the specific characteristics of each franchisee.
— Capital advantages: A capital framework in which the benefits of mutuality demonstrably outweigh the costs and which cannot readily be duplicated outside Lloyd’s.
— A secure, highly-rated market: Insurer Financial Strength Ratings of at least ‘A’ from Standard & Poor’s, AM Best and Fitch.
— Outstanding market access: Cost-effective, easy access to the world’s major markets, supported by a global brand and license network.
— Efficient business processes: A framework of standards for business process that enables firms to deliver services to customers at a cost and level of risk comparable with other platforms, and offsets the inherent costs of a subscription market.
The Strategic Plan – which may be viewed in detail at: http://www.lloyds.com/NR/rdonlyres/B37C6D13-3C56-4300-BA4B-1A961B83116F/0/BuildingtheOptimalPlatform.pdf, “sets out the features that characterize each of these benefits, the workstreams and milestones that been put in place to deliver the features and benefits, and the significant issues and themes that emerged during development of the Plan,” said Lloyd’s.
While it doesn’t spell out the reasons behind the creation of an “Optimal Plan,” it’s clearly designed to try and attract and keep more business in the London market. A number of Lloyd’s insurers have recently expanded, established or acquired operating entities in the U.S. and Bermuda. These include some of Lloyd’s biggest names – Hiscox, Amlin, Catlin, Kiln, Beazley and Wellington, to name a few. Amlin, for example, recently established a Bermuda-based reinsurer with an initial capitalization of $1 billion (See IJ Website Nov. 15). That’s money that’s not going into the London market.
Lloyd’s Chairman Lord Peter Levene implicitly recognizes the challenge. In the introduction to the Plan, he noted that while significant progress has been made in recent years, “we operate in a fiercely competitive environment and cannot afford to stand still.” He stressed that the Plan “sets out a clear goal for Lloyd’s: to be the platform of choice for insurance and reinsurance buyers and sellers to access and trade both specialist and large property and casualty risks. It must be easy to access and do business with Lloyd’s. The market’s performance must be stable offering good returns, and the cost of doing business at Lloyd’s must be competitive. The approach to assessing risk must recognize the individual make-up of each franchisee.”
Levene explained that the starting point for the offer described in the Plan as the Optimal Platform was conceived to:
• Assess the strengths and weaknesses of Lloyd’s current offer against industry trends.
• Identify the best possible set of benefits Lloyd’s could offer a business operating or thinking of operating at Lloyd’s.
• Identify what needs to be done to deliver the benefits, with an action plan.
He added that the “support and commitment of those working within the market will be critical to Lloyd’s achieving its objective. We will continue to work closely with the Lloyd’s Market Association. For its part, the franchisor is committed to complete transparency and effective communication with franchisees as we move forward.”
Was this article valuable?
Here are more articles you may enjoy.