Lloyd’s commemorates 9-11 as “market-changing”

Lloyd’s of London recently commemorated Sept. 11, 2001, noting how the event changed the entire face of the insurance industry.Benfield chief executive Grahame Chilton noted the effects of 9-11 on the insurance industry during Rendez-Vous, an event that marks the beginning of the annual negotiation process prior to renewals agreed. “You cannot forget the tragic loss of life, but 9-11 heralded a new era of risk for the market on a scale it had never seen,” Chilton said. “The industry now faces risks at a level which it could not have thought possible before, and now has to work on new ways to meet the needs of clients who want to transfer or mitigate the risks they face.”Rolf Tolle, head of the Lloyd’s franchise performance directorate, said underwriters have taken a new approach across the market as a result.”The models the industry had used previously which estimated the level of exposure to certain catastrophic incidents had to be completely re-written on a much larger scale,” he said. “In effect, this means that the underwriters have changed the way they do business.”They now factor in a completely new level of risk and higher levels of solvency and claims reserves. This is a completely different world from the one we had prior to September 11.”Tolle noted the level of claims following the atrocity was “unprecedented, and claims teams had to redesign their processes to ensure that they had the ability to cope with catastrophes on a similar scale.”According to Marcus Rivaldi, senior insurance analyst for rating agency Standard & Poor’s, post 9-11 changes in the industry could be seen most clearly at Lloyd’s.”September 11 was the catalyst for the introduction of the franchise system in the Lloyd’s market,” he says. “Lloyd’s as a market faced a huge number of claims from 9-11, and this added to the view of the market that it needed to remodel itself to meet the new levels of risk which were now faced.”