Executive summary

This report challenges the binary lead-follow construct, replacing it with a nuanced, six-segment categorisation based on insurers’ strategic positioning and capabilities. We distinguish true leadership from technical position on a slip, acknowledging that while most underwriters aspire to lead, this can mean different things to different people. Generally, as you move from left to right across the strategic positions, relevance to brokers decreases. Every position in this framework – from the Full-Service Lead to the critical provider of capacity – represents a commercially valid and essential contribution to the market’s collective strength, and we increasingly observe capital seeking to support specific models of underwriting.

Bridging the reality gap

We believe the industry may be misjudging the reality of where their underwriting teams sit on this lead-follow spectrum. Survey respondents claim to lead roughly 40% of their gross written premium (GWP); however, an outside-in assessment reveals that much of this business is not true lead but rather written as a Capacity Lead: leading slips on a technical basis without truly engaging with the client or intermediary and shaping the risk. This disconnect is particularly visible in the Influential Follower segment, which some interviewees dismissed as a myth designed to appeal to underwriters’ pride while they simply provide additional, interchangeable capacity. In a rapidly changing market, it is these Capacity Lead and Capacity Follow roles that are most susceptible to the twin trends of facilitisation and digital trading.

Capabilities that count

What do clients and brokers actually want from their leaders? It is rarely simply capacity. Clients want leaders who have the depth of technical expertise to understand their business and risks without lengthy explanations, and who can offer practical, cost-appropriate solutions. Brokers share these priorities but also look for speed, a credible expert they can present to clients and a reputable name that facilitates efficient risk placement. The most sophisticated insurers are deliberate about their lead proposition, aligning investments in technical and operational areas to capabilities they believe will allow them to differentiate themselves in each class of business – such as speed of response, nuanced pricing and claims expertise. Notably, the era of the ‘big name’ underwriter appears to be in decline; true leadership is now increasingly viewed as an institution’s collective depth of underwriting capability and claims handling rather than individual superstars.

The strategic imperative: defining a lead maturity journey

Maintaining strategic resilience in a fast-changing marketplace necessitates a frank assessment of current positioning across each of the six lead-follow segments. To avoid self-misclassification, sophisticated players combine quantitative and qualitative analysis with an internal and outside-in view. As a starting point, we have developed a set of questions that CUOs can ask of each class. Once the current state is established, CUOs can create lead maturity plans and target investment.

A mixed picture: fees and formalisation

While leading incurs higher operating expenses and deeper investment, the market is divided on the desirability of open market leaders’ fees. For most interviewees, potential premium upside is outweighed by the impact on follow book economics and questions around legal liability. There is also little appetite for formalising the role of the lead, with concerns that this could entrench established leaders and curtail innovation. A free-market approach, where insurers seek to build differentiating lead capability in diverse ways, is seen as a strength of the Lloyd’s market.

Anticipating market consolidation

65% of market participants anticipate a consolidation of the number of lead underwriters over five-to-ten years. This shift is driven by the increasing bifurcation between lead and follow, a softening market and the rising economic thresholds required to sustain a competitive lead proposition. Traditional followers who duplicate the activities of the lead face an existential squeeze as the market matures; the continued growth of fast follow is automating the ‘tail’ of the slip, necessitating a more efficient operating model for those not in a ‘true lead’ position. Consequently, leadership at Lloyd’s is evolving into a deliberate and highly focused strategic choice. The mandate for insurers is therefore to pursue an honest ‘lead maturity journey’. Success will depend on the ability to distinguish between underwriting classes where an insurer can realistically excel as a true lead and those where it is more advantageous to pivot to an efficient, low-cost follow strategy. Those who make their strategic choices deliberately, supported by an honest appraisal of their capabilities, will be the ones to shape the next chapter of this market.