Editorial

“EXTERMINATE” the underperformers

Picture this: Daleks – the violent and merciless cyborg aliens from Doctor Who – are gliding around the world-famous underwriting room at Lloyd’s of London’s Lime Street headquarters, but rather than barking their usual “EXTERMINATE,” they’re saying “REMEDIATE” while pointing their evil eyestalks at underperforming syndicates and lines of business. That’s essentially what has happened at Lloyd’s over the past three years – minus the Daleks, of course.

At approximately 335 years old, Lloyd’s of London is by far the oldest insurance marketplace in the world. It also plays a critical role in the global insurance and reinsurance industry. Every day, more than 50 insurance companies, over 300 registered Lloyd’s brokers and a global network of more than 3,900 local coverholders operate in and bring business to Lloyd’s, taking advantage of the specialist underwriting expertise, thought leadership and innovative solutions the market has to offer.

Lloyd’s has managed to return to profitability and reassert its historic dominance as a world-leading specialty insurance marketplace

Historically, brokers have also been attracted by the financial certainty of the Lloyd’s market – but this came into question in 2017 and 2018, when Lloyd’s suffered a dramatic decline in profitability, thanks to an uptick in natural disasters and the low interest rate environment, which was depressing investment yields.

Enter the Daleks. In 2018, Lloyd’s took action to improve its underlying performance and restore profitability with the launch of the Decile 10 initiative. Lloyd’s managing agents were told to focus on the worst-performing 10% of premium for each syndicate and enact remediation plans. Failure to reduce expenses and bring the underperforming syndicates and classes of business back to profitability would result in plans being rejected and classes of business and syndicates being ... well, exterminated.

Lloyd’s CFO Burkhard Keese recently revealed the impact of the Decile 10 initiative: Since 2018, managing agents and syndicates have remediated nearly £7bn, or 20% of premiums. In doing so, Lloyd’s has managed to return to profitability and reassert its historic dominance as a world-leading specialty insurance marketplace. The effort proves that if insurers exterminate their weakest links and grow stronger at their specialties, we could eventually reach a global marketplace that is even more focused on expertise, value-added services, innovation and providing customers the best possible experience they could ask for.

The team at Insurance Business www.insurancebusinessonline.com.au

EDITORIAL

Managing Editor Paul Lucas Senior Editor Bethan Moorcraft

Journalists Danny Wood, Maria Hoyle, Mia Wallace, Surina Nath, Ryan Smith, Ksenia Stepanova

News Writers Lyle Adriano, Terry Gangcuangco, Roxanne Libatique, Gabriel Olano Copy Editor Clare Alexander

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Tony Walker ART & PRODUCTION

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