Underwriting ‘elephant in the room’ hampering ‘free flowing business’ – QRG Specialty

“Underwriting by committee” and the Lloyd’s syndicate forecast reporting process are two factors that are hampering “free flowing business” in the insurance and reinsurance markets.

That’s according to Nick Pomeroy, head of reinsurance and broking at Lloyd’s broker QRG Specialty.

Speaking exclusively to Global Reinsurance, Pomeroy explained that – in his opinion – underwriters are increasingly unable to make timely decisions on submitted risks, with some professionals lacking the authority to immediately offer cover.

For him, this “underwriting by committee” approach creates “an inherent slowing down in the overall placing process and the overall creation of insurance and reinsurance capacity”.

He said: “The only thing underwriters can actually do straight away is say no. They can’t say yes anymore. They’ve got to take away the information [provided by a broker] and give it to their actuaries, who will opine on it and come back – then it’s almost underwriting by committee, which is a frictional inhibitor of a free flowing business.

“[This is] an objective criticism. The elephant in the room. Long gone are the days when an underwriter at a Lloyd’s syndicate or in the company market [will] say ‘yes, I’ll do you 15%’ and they wrote the risk because they knew what they were doing and liked it. Doesn’t happen that way [any more].

“You’ve got an inherent slowing down in the overall placing process and the overall creation of insurance and reinsurance capacity.”

Inflexibility impacting income?

Alongside this alleged reduction in underwriting immediacy, Pomeroy observed that the detailed business forecasting process that Lloyd’s syndicates need to undertake can restrict growth and prevent the uptake of new opportunities.

The annual Lloyd’s of London Syndicate Business Forecast (SBF) is a return submitted by syndicates to the marketplace’s Performance Management Directorate (PMD).

This document indicates syndicates’ planned future performance and typically includes predictions around premium income, acquisition costs and benchmark prices for new risks, as well as rating adequacy details, actuarial plans and new business strategies.

Pomeroy noted that most syndicates began working on their 2026 SBFs between the end of 2024 and March this year, ahead of September’s submission deadline. Lloyd’s typically gives syndicates its approval of the SBFs in October or November, he added.

However, Pomeroy raised concerns that financial parameters agreed between Lloyd’s of London and its syndicates in the “inflexible” SBFs removes the opportunity for businesses to “make hay while the sun shines” because syndicates cannot “venture easily outside of [their pre-agreed] income estimate”.

Therefore, he warned that syndicates may be forced to decline renewal business or attractive risks in order to stay within predetermined income boundaries set within the agreed SBFs.

“The systems or the mindset isn’t conducive to free flowing business,” Pomeroy stated. “Sometimes the market does itself a disservice through its lack of response.”