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Lloyd’s of London is without doubt an insurance powerhouse. As of December 31, 2016, there were 3,859 approved Lloyd’s coverholder office locations around the world.
Canada and the USA represent around 50% of Lloyd’s overall global business breakdown. Coverholders, such as Endeavour Insurance Services (a delegated authority specialist and Lloyd’s Broker), represent a vital distribution channel and offer a local route to the Lloyd’s market.
“The coverholder and binding authority model allows domestic brokers to write specialty risks, combining their expert, local knowledge with the security and trust of placing specialist business within the firm foundation of Lloyd’s,” said Sarah Newman, support services director, Endeavour.
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“Lloyd’s coverholders around the world also gain access to the market’s broker channels. Producers gain a competitive advantage over other brokers whose scope could otherwise be limited to their domestic market.”
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In its first half 2017 results report, Lloyd’s highlighted growth in coverholder business as a key driver of its international expansion. As risks evolve and become ever more specialized, the demand for a specialty market like Lloyd’s is likely to continue to grow.
“There’s little doubt that the coverholder model increases the volume of business from Canada and the USA, in particular flowing into the London market,” Newman told Insurance Business. “With the territorial scope of these countries, and affiliated provincial / state laws, this provides an opportunity to offer real diversity of risk.”
Despite enormous success, the Lloyd’s markets and coverholders are not immune to the industry-wide demand for innovation and digitisation. Future trends will be determined by the mindset of those working within the insurance industry, and a willingness to drive change instead of waiting for others to offer a solution, according to Newman.
“Brokers, in particular, must be objective and honest when asking: what is our value, what is our relevance, rather than ignoring the problems which exist within the current model simply because it protects our own position, as opposed to providing a better platform for our clients to be competitive,” she commented.
“A key part of this involves brokers embracing new technology, and realising that this won’t take their jobs, but will instead change the nature of their role and relationship with the market and coverholders. There is still much that we can provide to the process, and coverholders still value that relationship. “
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