Lloyd’s CEO Inga Beale has outlined a new oversight approach and plans to reduce the Corporation’s workforce by 10 percent in a half-yearly circular sent to the market.
To protect the Central Fund in the current challenging environment, Lloyd’s syndicate oversight activity is focusing on all elements of combined ratio, rather than almost exclusively on loss ratios, she explained.
In her note, she reiterated an earlier pledge from the Corporation to conduct fewer minimum standards reviews and focus on high-impact areas, and to have fewer portfolio review classes.
“We will spend more time helping underperforming syndicates improve underwriting performance while leaving the good performers to get on with running their successful businesses,” said Beale.
She also said that the Corporation plans to reduce its workforce by around 10 percent.
“We are seeking to minimise the impact on our people by opening up a voluntary severance programme and through re-deployment within the organisation,” Beale noted.
Beale said that given current conditions, improved performance means the market should shrink in 2017 and 2018 as underwriters maintain strong discipline.
“While progress against our objectives in 2017 has been encouraging so far, the fact we are expecting the market to shrink this year and next shows there is still a performance gap to address,” she added.
“To close this gap, syndicates must exercise strong underwriting discipline, improve efficiency and reduce costs, supported by targeted market oversight, innovation and talent,” Beale continued.
Managing agents and brokers need to look at ways to reduce internal costs and work more efficiently; adopting London market Target Operating Model (TOM) initiatives will help reduce market-wide costs over time, Beale said.
Regarding acquisition costs, Beale noted that the Lloyd's oversight team had collected data from a number of managing agents, and would soon contact the market on the next possible steps to help reduce costs across the entire value chain.
“We expect to see the new oversight focus I have outlined above reflected in managing agents’ 2018 plans,” Beale said.