Establishing a syndicate at Lloyd’s

A guide for applicants

This guide is for businesses who wish to establish a Lloyd’s underwriting business. 

What is a syndicate?

Syndicates are the traditional market facing business units at Lloyd’s. They can be supported by one or more members of Lloyd’s; the members are the insurers for their share of any risk written by the  syndicate (separate, not joint, liability).

Why establish a syndicate at Lloyd’s?

  • Syndicates are usually, but not exclusively, established by existing market groups looking to access and benefit from Lloyd’s brand, licence network, rating and distribution. Each syndicate can set its own appetite for risk and formulate its Business Plan to be agreed by Lloyd’s.
  • A syndicate, through its managing agent, arranges its own reinsurance protection and manages its exposures and claims.
  • Syndicates can lead, and provide follow capacity, on subscription risks covering a wide range of classes of business although many will be specialists in particular classes.

Lloyd’s assessment criteria

Lloyd’s has established overarching criteria for the assessment of all new entrants; these criteria are detailed in the requirements made under the Underwriting Byelaw, under the Byelaws and Requirements heading.

More broadly, Lloyd’s will consider the extent to which the applicant’s proposed business adds value to the Lloyd’s market, having regard to criteria including:

  • the nature of the applicant’s business;
  • the fitness and propriety of the applicant’s directors, officers and key personnel;
  • the collective suitability of the applicant’s board of directors and of each of its committees;
  • the ability of the applicant to comply with Lloyd’s cultural requirements and targets including those relating to diversity
  • the ability of the applicant to comply with Lloyd’s requirements for sustainability;
  • the applicant’s capability and readiness to engage in and make changes required by Lloyd’s market transformation initiatives.

You are strongly advised to read and consider the full requirements available on Lloyd’s.com.

In order to help you formulate your proposition and obtain a better understanding of the typical costs associated with operating a syndicate at Lloyd’s we have created the following templates:

  1.  Lloyd’s Standard Model (LSM)
  2. Triage Quantitative Submission

The role of the managing agent

All members of Lloyd’s must underwrite insurance through an agent, known at Lloyd’s as a managing agent. It is the managing agent that will employ the underwriters who will bind the contracts of insurance and reinsurance on behalf of the Lloyd’s members of the syndicate. Managing agents will also carry out all the other activities of insurance business at Lloyd’s on behalf of the members. All Lloyd’s managing agents are regulated in the UK by the PRA and FCA, as well as Lloyd’s.

In the early stages of your application, we do not require you to have reached a final decision on which managing agent you intend to partner with. By the time your application has reached the stage where you are presenting to the Business Opportunities Committee (BOC), however, you will need to have identified who you will be working with, and representatives of the managing agent will need to attend the BOC meeting.

The managing agent will charge fees for the services they deliver (which may include finance, actuarial, claims etc), however the level of fees is a matter of commercial negotiation between you and the managing agent.

It is advantageous in the early stages of your application to have an idea of who you want to work with as a managing agent. The different routes available are listed below:

Launch via a third-party managing agent

  • Partner with an existing Lloyd's managing agent that provides the operational, governance, compliance and regulatory infrastructure required to operate a syndicate.
  • Often the quickest and most straightforward route to market for new entrants.

Establish a new syndicate and a new managing agent simultaneously

  • Apply to create both a syndicate and managing agent as part of the same overall market entry strategy.
  • Provides maximum control over strategy, operations and governance but typically requires greater investment and preparation.
  • Please see our guide to becoming a managing agent at Lloyd's.

Fees and charges

  • Lloyd’s syndicate application fee is £200,000 (VAT is not payable). 
  • The application fee invoice will be issued once the application has been recommended to the Lloyd’s Council by the Business Opportunities Committee. 
  • Please note the application fee is non-refundable.
  • Further information on charges payable by members to operate in the Lloyd’s market can be found in the Triage Quantitative Submission.
  • New members are not required to pay an application fee however; a £1,000 prospect fee is payable for each entity onboarded within an application (waived for known entities). This is adjustable on the number of controller entities and directors requiring KYC checks. The full fees will be charged once the member application is completed.
  • The Third Party FAL provider application fee is £2,000 with an additional £1,000 prospect fee for each entity. This is payable in full with the application.

We review our charges annually and every September we release a Market Bulletin confirming the charges for the following year.

Application process

An application has seven steps.

A syndicate application typically takes 2–6 months from the Triage stage to permission to underwrite.

All syndicate applications are handled in full confidentiality.

1.

Enquiry

Contact the New Entrants team

Please contact the New Entrants team to arrange an initial discussion.

The purpose of this initial discussion is to understand the principal features of the syndicate proposal and to discuss operating at Lloyd’s and Lloyd’s criteria for syndicate applications.

We ask that you provide a summary of the proposition (maximum five slides), two full working days in advance of the initial discussion, outlining:

  • Who you are, including your management team and relevant experience.
  • What you do, including the opportunity, approximate gross written premiums for the first three years, classes of business to be underwritten by the syndicate and the geographical split of the business.
  • Why Lloyd’s is right for you and how you believe you will contribute to the success of the Lloyd’s market.

Following the conclusion of all enquiry meetings, we will advise you of the outcome, which in most cases will either be: 

  • Progress to Triage (stage two); or
  • Why Lloyd’s might not be the right place for your proposition 
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2.

Triage

Qualitative and Quantitative submission

The Triage Group comprises heads of business functions from a wide range of Lloyd’s teams, including: Syndicate Performance; Underwriting Performance; Exposure Management; Capital and Market Development. The Triage Group members report to the members of the Business Opportunities Committee.

The role of the Triage Group is to review a more detailed summary of the proposal, alongside relevant financial information, and make a determination as to whether there are any concerns that may prevent the application from being recommended to the Business Opportunities Committee. We ask that you complete both the Triage Qualitative and Quantitative Submission templates. If you have any questions about the templates, please contact the New Entrants team.

There is a weekly standing meeting of the Triage Group to ensure we can review your proposal in a timely manner. You will need to provide the completed templates at least two full working days prior to the agreed Triage Group meeting to which we assign your proposal. Please note you do not attend the Triage Group meetings.

The Triage Group will review the submitted Qualitative and Quantitative templates and any other information provided and will confirm, within two working days, either:

  • Progress to the Business Opportunities Committee (process stage three);
  • A request for further information; or
  • An explanation of why the Triage Group considers that your proposal does not meet the criteria for a new syndicate.

Our assessment is risk-based and proportionate to the size, complexity and novelty of the proposal. We aim to make our core information requirements clear at the outset and will only request additional analysis where this is necessary to address a specific aspect of the proposal.

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3.

Business Opportunities Committee

Detailed plan presentation

Select members of Lloyd’s Executive Team are the voting members of the Business Opportunities Committee and you will be invited to attend an hour’s meeting in person with the Committee.

Typically, this will allow 25 minutes for you to present your opportunity, 25 minutes for the Committee to raise questions and remaining time for further questions from non-voting committee members. Please note that if you are unable to attend in person then a virtual meeting can be arranged.

Your submission will consist of four parts:

There are scheduled meetings through the year for the Business Opportunities Committee. We will agree with you the meeting to be allocated to your application. This ensures we can review your proposal in a timely manner. You will need to provide the information at least three full working days prior to the agreed meeting.

The outcome of the presentation will be either:

  • Agreement to submit the application to Lloyd’s Council with the support of the Committee;
  • A request for further information; or
  • An explanation as to why the BOC considers your proposal does not meet the criteria for a new syndicate.
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4.

Capital & Planning Group

Business Plan and Capital Approval

The Capital & Planning Group (CPG) will undertake a detailed review of the proposed Business Plan and capital requirements.

Accordingly, once your syndicate application is endorsed by the Business Opportunities Committee, the managing agent will be required to submit the following documents three weeks before the agreed meeting date: 

The managing agent submits the SBF and Lloyd’s Capital Modelling (LCM) output, which will be presented to the Capital & Planning Group (CPG) for review.

CPG agreement to the Business Plan and capital requirements will normally be required before the application is submitted to Council.

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5.

Lloyd’s Council

Our highest governing body grants ‘in-principle’ approval

Following CPG agreement, the New Entrants team prepares a paper for Lloyd’s Council’s consideration.

The application will be notified to Lloyd’s Executive Team ahead of the Council meeting. The Council paper, is presented, usually by Lloyd’s Chief Commercial Officer.

The timing of the presentation to the Lloyd’s Council will be determined by the next available scheduled Council meeting.

The outcome of the Council meeting will be either:

  • The Council grants ‘in-principle’ approval;
  • The Council requests further information; or
  • An explanation of why the Council considers that your proposal does not meet the criteria for a new syndicate.

Please note that if you would like to start writing business from 1 January of the upcoming year of account, to allow for the time it may take to fully establish the syndicate. 

An ‘in-principle’ decision may be deemed to have lapsed if Permission to Underwrite for the syndicate is not secured within 6 months.

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6.

Making it Happen

Deliver the operational and administrative aspects

Once the syndicate application has ‘in principle’ approval from Lloyd’s Council, we will work with you through a number of ‘Making it Happen’ actions.

Some Making It Happen activities, particularly capital, member and international regulatory arrangements, can have significant lead times. We recommend discussing these with the New Entrants team and your managing agent as early as possible.

The New Entrants team will set out and explain the actions required to obtain final approval (Permission to underwrite).

These actions include:

  • Securing capital and finalising the capital arrangements to support the syndicate.
  • A full review against Lloyd’s Principles to ensure the proposal meets maturity expectations.
  • Establishing any necessary licensing arrangements (e.g. the NAIC for US E&S or reinsurance business) and arrangements to underwrite via any other Lloyd’s platform such as Lloyd’s Brussels, Singapore etc. Please note that NAIC approval takes three months and, until obtained, the syndicate will be unable to write eligible US surplus lines business.
  • Setting up the syndicate banking arrangements (Premium Trust Funds, situs trust funds).
  • Obtaining approval of any new corporate member(s).
  • ‘Know your customer’, Anti-Money laundering and other due diligence (collectively “DD”) checks on known key persons and controllers.
  • Possible resubmission of the SBF to the CPG if there are material changes from SBF previously agreed.
  • Establish the necessary legal arrangements. This will include entering into a standard Managing Agents Agreement and the syndicate Active Underwriter Secondment agreement.

We strongly prefer that the Active Underwriter (AU) of the syndicate is based in the UK. However, we recognise that in some cases the applicant may wish to appoint an AU who is resident overseas. Conducting AU functions overseas could create a ‘permanent establishment’ that could jeopardise Lloyd’s tax agreements.

In these cases, the applicant and the managing agent will need to establish a set of protocols (to be agreed by Lloyd’s) that ensure the activities of the AU are conducted in the UK.

We anticipate that a syndicate application will take approximately 4 to 10 weeks to complete the Making it Happen stage. However, this timeframe excludes any material period in which we are waiting for responses to questions we raise and responses to requests for additional information.

When all the Making it Happen actions are satisfactorily completed, your application will move to the final stage - Permission to Underwrite.

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7.

Permission to underwrite

Final approval and launch

The Business Opportunities Committee has delegated authority from the Council to approve the final Permission to underwrite. The New Entrants team will prepare a submission to the Committee summarising the application and confirming that the requirements of the Making it Happen process have been successfully completed. This stage can usually be completed after circulation of a paper to members of the Committee, without the requirement for a meeting. Unless a member of the Committee requests further information, the decision will be confirmed within two working days.

In some cases, where there are Making it Happen actions that are not fully completed, these may be addressed by the addition of conditions to the Permission to underwrite.

A letter confirming Permission to underwrite will be provided via the New Entrants team. The syndicate cannot quote, commit to or bind any business until this letter is received.

Post Permission to underwrite

In line with all syndicates, performance is subject to quarterly review and annual assessment by the relevant Lloyd’s technical teams. The managing agent will provide quarterly metrics on behalf of the syndicate to validate it is performing in line with the agreed plan.

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Frequently asked questions

FAQResponse 
When should I engage with Lloyd's?We encourage applicants to engage with the New Entrants team as early as possible, even before a proposition is fully developed. Early engagement can help applicants understand Lloyd's requirements, likely timelines and potential challenges before significant investment is made.
What makes a strong syndicate application?
Lloyd's assesses whether a proposal adds value to the market, alongside factors such as the experience and suitability of key personnel, viability of the capital strategy, capability of operating in accordance with Lloyd’s Principles Based Oversight framework and alignment with Lloyd’s expectations on culture.
Do I need to have capital in place before applying?Not necessarily. Capital is typically raised as the application progresses and is reviewed through the Capital & Planning Group and Making it Happen stages. However, applicants should have a credible strategy for sourcing and supporting the capital required for the proposed syndicate.
How can I find out more about London Bridge 2 and its benefits in supporting new syndicate structures?Please contact New.Entrants@lloyds.com in the first instance, and we will be happy to put you in contact with the London Bridge 2 team.