New Lloyd’s includes tough stance

Following an announcement of a major market “modernization restructuring” toward the end of last year, Lloyd’s of London has adopted two tough stands to ensure a more speedy flow of premiums collected as well as tighten up on shoddy regulatory management of syndicates.

David Gittings, who heads up Lloyd’s regulation department, says that, in line with the market’s efforts to drive up standards, no tolerance will be given this year to businesses falling short in the following areas:

An individually collective and weak board;

Failure to comply with codes of practice;

Inadequate independent reviews, reinsurance recoveries, aggregate monitoring, credit control and management of cashflow.

Lloyd’s regulatory division has the ability to raise market entry requirements and capital loading, and de-registration as an ultimate action against offenders. Companies within the Lloyd’s market will also have to deal with greater self-regulation compliance this year, Gittings says. “Regulated entities need to understand the greater responsibility that will be placed on them to ensure that their operations meet the standards expected.”

The Lloyd’s Market Association (which was recently formed by the merger of several of Lloyd’s representation associations) has issued instruction to its syndicate members to apply premium payment clauses to policies. This will enable underwriters to issue notice of cover cancellation if premium terms are not met. The four associations making up the new LMA are: The Lloyd’s Underwriters’ Association (LUA), Lloyd’s Underwriters’ Non-Marine Association (NMA), Lloyd’s Aviation Underwriters’ Association (LAUA), and the Lloyd’s Underwriting Agents’ Association (LUAA).

In late November of last year, Lloyd’s announced that it had agreed to enter partnership of a “London market modernization plan” in conjunction with the International Underwriting Association and the Lloyd’s Brokers’ Committee. In total, the associations and markets represented cover approximately 350 businesses. The market reform agreement places minimum standards on its members under a report titled “London Market Principles 2001”. Its objective is to improve customer service and speed up the way the market operates. So far, about 60% of Lloyd’s members have signed up to the agreement, with over 77% of the market’s brokers including all of the “top five brokerage houses” of Marsh, Aon, Willis, JLT and Heath Lambert.