What is Lloyd's?
The following pages will give you an insight into the unique way in which Lloyd's is structured, the role of the Market and the Corporation and the different departments (directorates) that make up Lloyd's.
Despite what many assume, Lloyd’s is not an insurance company but the largest insurance market place in the world, housing a range of insurers providing different products. Throughout its over than three hundred year history it has gained a reputation for innovation and expertise and is known across the world as the place to bring unusual, specialist and complicated risks.
The Corporation of Lloyd’s does not write or agree insurance policies but houses and oversees the market which does. Individual and corporate members join together as syndicates to provide capital to underwrite risks.
The day to day running of these syndicates is undertaken by managing agents, who must supply the Corporation of Lloyd’s with information about performance as well as agree the strategic direction of the syndicates they are responsible for.
Throughout Lloyd’s long history there have a been a number of changes to the location, structure and governance of Lloyd’s, but its basic market principles have always remained the same. One of the most important of these is the way that business is done face-to-face on the underwriting floor. Brokers bring their clients’ risks to underwriters who decide whether they will accept all or part of the risk. If the value of the insured risk is very high, then the broker may arrange for it to be spread across several syndicates, which each of them subscribing to a part of it. This ‘subscription system’ allows even small syndicates to participate in large risks and the face-to-face nature of negotiations allows brokers to get a swift decision.
Lloyd’s also delegates responsibility to local brokers – called coverholders – to undertake business on behalf of syndicates or managing agents. 80% of Lloyd’s business currently comes from outside the UK so the role played by coverholders is important to Lloyd’s success.
Lloyd’s is a particularly expert and secure place to do business. With so many specialist underwriters under one roof, brokers have access to an exceptional level of knowledge and experience. Its network of international licences mean the market can do business in over 200 countries and territories. Both its unique brand and its reputation for paying all valid claims are famous across the world. And its capital structure – Lloyd’s financial ‘chain of security’ - ensures it consistently receives A or A+ ratings from ratings agencies.
