Lloyd's of London has temporarily removed reinsurance from the scope of its electronic trading mandate.
The 330-year-old insurance market has also said that so-called following syndicates, which take a portion of a risk after a lead syndicate has taken the first share, will fall under the mandate's scope from the first quarter of 2019.
Lloyd's announced March 20 that it would require its syndicates to use the PPL electronic trading system and that they should place 30% of their business using PPL by the end of 2018. Syndicates that fail to meet the targets will face financial penalties.
A market bulletin published March 11 updating the electronic placement requirements said that reinsurance contracts have been taken out of scope for the early stages of the mandate. Facultative reinsurance, which covers a single risk or a defined group of risks rather than the broader cover offered by traditional treaty reinsurance, will be in scope from the beginning of the fourth quarter of 2018. Treaty reinsurance contracts will be added in 2019 "once the functionality in PPL has been completed," the bulletin said.
Lloyd's also said that insurance contracts entered into by following syndicates would be in the scope of the mandate from the first quarter of 2019 and would have to be reported on for management information purposes from the beginning of the fourth quarter of this year. Much of the underwriting at Lloyd's is done on a subscription basis, where a lead underwriter takes a portion of the risk, and following underwriters then take their shares on the same terms until all of the risk is placed into the market.
Lloyd's expects that where a Lloyd's lead underwriter has used electronic placement on a contract, all Lloyd's followers on that contract will do the same.
