Lloyd’s Market Association Deepens Engagement in US Insurance Sector
Lloyd’s, a leading global insurance marketplace, is significantly increasing its direct involvement in the US market, according to recent announcements. While North America already accounts for approximately 58% of Lloyd’s total business, this increased focus, spearheaded by the Lloyd’s Market Association (LMA), signals a strategic move to deepen its presence and influence within the region.
Elizabeth Jenkins, Underwriting Director of the LMA, is at the forefront of this initiative. The LMA represents the interests of underwriting businesses within Lloyd’s, encompassing all 55 managing agencies and members’ agents.
“The LMA has always been focused on North America, but we just haven’t been very vocal about it,” Jenkins shared in an interview. “Historically, we’ve engaged through committees from London. We need to be on the ground in North America, speaking to members, brokers, and associations like WSIA to understand where we can help.”
Jenkins highlighted Lloyd’s reputation for handling complex risks but emphasized the goal of expanding beyond that role. “The market wants to continue to grow, but in a profitable and sustainable way,” she explained. “We don’t just want to be the market of last resort.”
Bridging the Gap Between Lloyd’s and the US Market
Jenkins outlined three key objectives for the LMA’s strategy:
- Promoting Lloyd’s expertise and value proposition
- Educating brokers, underwriters, and risk managers about innovations within Lloyd’s
- Providing support, particularly in regulatory and technical guidance
“In London, we excel at this, working with the UK government and regulators across Europe. Now, we want to strengthen our presence in the US and engage with regulatory stakeholders,” Jenkins stated. “This isn’t new for the LMA—we’ve already been doing some of this, but now we’re formalizing our approach, getting boots on the ground, and directly engaging organizations.”
The LMA aims to bridge any existing communication gaps, providing brokers, underwriters, and risk managers with a clearer understanding of Lloyd’s offerings and the support available through the LMA. “Think of us as a bridge, educating both WSIA and London market members on North American developments,” Jenkins added.
Addressing Challenges and Opportunities
The US regulatory environment presents one of the most significant immediate hurdles. Unlike many nations where regulations are handled nationally, the US operates primarily on a state-by-state basis. This fragmented system can lead to varied rules, especially concerning emerging issues such as artificial intelligence (AI), potentially causing confusion and uncertainty for insurers.
“At the LMA, we’ve been working on AI and cyber clauses, assessing how they would perform in loss scenarios involving AI,” Jenkins explained. “It’s been a valuable exercise—overlaying AI on to LMA clauses, analyzing different lines of business, and advising managing agents on potential responses.”
The rise of the excess and surplus (E&S) market is another area attracting increased regulatory attention. According to Jenkins, the first half of 2024 saw a 10% increase in surplus lines business. This growth is drawing interest from US state regulators. Jenkins stated that this increased scrutiny could lead to new regulations, potentially applying the same standards to E&S underwriters as to admitted carriers.
The political climate could also influence insurance demand. Jenkins observed that potential policy changes, such as those planned during the Trump administration, including tax breaks, could stimulate M&A activity. “If you’ve got a heating up of M&A, you’ve probably got transactional liability coming hot on the heels,” she said. This presents a significant growth opportunity as London excels in this area. Geopolitical tensions and trade disputes contribute to increased demand for political risk and trade credit insurance, further benefiting Lloyd’s specialty markets. “I could see business flowing to Lloyd’s in response to the geopolitical tension we’re seeing at the moment,” Jenkins remarked.
Expanding Risk Management for Natural Catastrophes
As the frequency and severity of natural catastrophes increase, insurers are preparing for heightened exposure. Lloyd’s plans to expand its assessment of natural catastrophe risks by broadening the scope of its existing LCM5 (Lloyd’s Catastrophe Management 5) methodology to include secondary perils. Jenkins noted that Lloyd’s currently remains “underweight” in terms of catastrophe exposure, suggesting capacity is available for profitable opportunities.
Lloyd’s is exploring additional methods to mitigate catastrophe risks. The Lloyd’s Lab, the insurance and reinsurance market’s innovation hub, is shifting its focus from post-event response to preventative measures. “For example, wildfire mitigation technology analyzes vegetation around homes and suggests modifications to reduce contagion risk,” Jenkins explained. “These innovations, alongside underwriting appetite, can help make coverage more sustainable and profitable.”
Jenkins concluded that the LMA’s enhanced engagement in the North American market is based on formalizing and expanding upon existing efforts, serving as a connector between US brokers and regulators and London-based underwriters. The goal is to reinforce Lloyd’s position and enhance its ability to deliver value to the US insurance market.
