With risk-adjusted rate changes falling and economic conditions unclear, Lloyd’s is pushing its underwriters to stay focused, especially in the expanding delegated business sector, according to Chief Underwriting Officer Rachel Turk.
Turk described the current market as fragile in Lloyd’s second-quarter update. She said managing agents lack agreement on pricing levels in many business classes. Outcomes vary across syndicates based on their position, strategy, or portfolio.
This isn’t terrible, but it’s below expectations. The mood has shifted and is turning more negative.
If current patterns hold, Turk expects total gross written premiums to fall below £60bn ($79.61bn) for 2025, once all rate changes are applied and no other factors influence the pricing environment.
Turk said Lloyd’s actions against underperformance are quiet and specific, countering claims that it takes no serious steps. Lloyd’s does not reveal actions taken against individual syndicates.
Underwriters are expected to manage catastrophe exposures carefully. If a syndicate suffers unexpected losses due to poor or outdated catastrophe models, Lloyd’s will step in.
Missing risk-adjusted rate targets also requires a discussion with Lloyd’s. If a syndicate underperforms, it must reduce its size or adjust its approach.
Turk noted the market aims to grow delegated business, whether through MGAs, algorithm-based models, or structured facilities. However, more delegation increases the risk of overcapacity and falling rates. Lloyd’s is watching this area closely, and delegated underwriters must show a clear, long-term plan.
She warned that poor oversight of coverholders will lead to limits on their authority. “The standards are high for MGAs applying to join,” Turk said.
Chief Financial Officer Alexandra Cliff said the market must now focus on discipline, realistic planning, and improving portfolios. Lloyd’s balance sheet must show awareness of risk across underwriting, claims, capital, and reserves.
We’ve already seen the U.S. dollar weaken by 5%, along with rising market swings. Inflation and recession may bring more problems. Global relationships, economic forecasts, and political tensions add to the uncertainty.
Cliff said Lloyd’s must reflect this risk in its capital and reserves to stay financially strong. The market must be ready for long-term volatility in any future condition.
