PRESS RELEASE
12 December 2024
LMA advocates for Lloyd’s to set benchmark in regulatory competitiveness
London, 12 December 2024: The Lloyd’s market has made significant progress towards its objective of reducing the burden of compliance with financial reporting for participants, especially in plans to reduce the volume and frequency of reporting for technical provisions and quarterly accounting returns, says Paul Davenport, Finance & Risk Director at the Lloyd’s Market Association (LMA). However, he adds, everyone involved knows there is a lot more to do in 2025 to fully realise the benefits of these changes.
Paul explains: “This initiative is not finished. It will need continued, deep market engagement as well as relentless pressure on the pace of delivery.”
Lloyd’s is not just a regulator
Paul continues: “I believe there is an opportunity in 2025 for Lloyd’s to lead the way and demonstrate how a regulator can receive less data but at the same time get better information with more meaningful engagement with firms. In doing so, we can show how collaboratively designed regulation can unleash competitiveness while maintaining oversight discipline.”
“To add further complexity, Lloyd’s is not just a regulator – it is also a performance manager, rating and central fund protector, tax and license compliance monitor, and process owner for capital to enter and exit fairly. That’s a lot of stakeholders to balance but those competing audiences often need the same information, so it is even more vital to be purposeful about every piece of data that is collected.”
Success relies on two key design principles
In Paul’s view success relies on focusing on two key design principles:
“First, as far as possible use what companies already produce to manage their own businesses. Now this might sound like handing control of how regulation is designed over to the regulated, but in this instance, it will have a positive effect. If firms are providing Lloyd’s with data that they actively use in running their business, then there is a much greater sense of accountability to its accuracy and to explain what it means.
“For example, there is currently a lengthy annual process for syndicates to submit plans (Syndicate Business Forecasts – SBFs) to Lloyd’s. But most firms also prepare an additional plan later in the year and this will be the actual plan that their employees are rewarded against – not the SBF given to Lloyd’s. Using one plan and reporting actual performance against it in a way which reflects firms’ own management would benefit both Lloyd’s and capital providers. The LMA’s recent Capital Insights report showed the importance of this as neither Lloyd’s nor capital providers currently feel like they are receiving all the clear, quality data they need.
“The second design principle is to reduce the inconsistencies between Lloyd’s and the rest of the insurance world – removing Lloyd’s-isms. Almost every aspect of reporting has been implemented in a Lloyd’s flavour and this has created a false exclusivity of specialist knowledge. This discourages talented people from working in the market, leads to a shortage of people applying for roles and adds cost, sometimes resulting in a premium for roles compared to the equivalent outside Lloyd’s. Granted, there are some unique features associated with the syndicate annual venture for each year of account, but it is fundamentally the same insurance business as anywhere else in the world.
“So there is a softer, but no less real, benefit of making reporting in Lloyd’s comparable to outside Lloyd’s – firms can recruit from the wider market and resource can be deployed across company and Lloyd’s platforms. This all leads to better work-life outcomes for employees and firms as well as opportunities for talented staff.”
And finally
Paul comments: “2024 should be acknowledged as a year of progress in this area and I know there are those in Lloyd’s who share our aspirations. This reporting rationalisation initiative needs to be finished at pace, but as a final thought, it needs to leave us with a data exchange environment for the market that does not then remain static for the next 20 years. A regulator that remains competitive has to be agile and able to evolve so that the two design principles above continue to stay true – utilise what firms already produce and stay in line with global industry best practice.”
- ENDS -
Notes to Editors
Media relations contacts
LMA:
Carole Porter, Head of Communications | +44 020 3307 3947 | Email: carole.porter@lmalloyds.com
Omnia Partners:
Will White, Director | +44 777 1555247 | Email: will.white@weareomniapartners.com
About the Lloyd’s Market Association (LMA)
The Lloyd's Market Association (LMA) exists at the very heart of Lloyd's, a world-leading global marketplace for complex risk where solutions to challenges are delivered every day. All 55 Lloyd's managing agencies, with a total market stamp capacity of approximately £52.6bn in 2024, and all Lloyd's members' agents, are members of the LMA.
We represent our members' interests to organisations including governments, regulators, and the market's central supporting body, the Corporation of Lloyd's. We provide professional and technical expertise in areas ranging from model policy wordings to the implementation of innovative technologies. We connect with our members to identify and resolve issues facing the market, and work in partnership with Lloyd's and the other market associations to influence initiatives and outcomes. We operate the market's most comprehensive technical education service, the LMA Academy. For more information visit: www.lmalloyds.com.