Lloyd’s: Syndicate additional Reporting Requirements on outwards reinsurance.

Lloyds has announced in the last week a series of additional reporting requirements on outward reinsurance contracts for the 2021-year. This follows an earlier set of guidelines set out in a market bulletin at the beginning of 2020 called “Performance Management – Supplemental Requirements and Guidance”.

The intention is that a syndicate should avoid excessive financial and strategic reliance on outwards reinsurance and should not pursue business strategies reliant on aggressive arbitrage and/or unsustainable outwards reinsurance arrangements. In short, Lloyd’s wants to ensure that syndicates’ protections are not placed with too few reinsurers

In summary Syndicates must notify Lloyds if

  • They intend to retain less than 10% of their gross written line, or their reinsurance premiums are expected to exceed 50% of their gross written premium for that year of account.
  • The gross reinsurance premiums with a reinsurer (or same group) is expected to exceed 20% of the syndicate’s gross written premium
  • A syndicate purchases or renews a contract with a reinsurer with a rating lower than and A- or the reinsurer does not have a rating and there is no collateral in place or it know that the reinsurer intend to retrocede the risk to a reinsurer that has a rating lower than A- or does not have a rating. This only applies where the estimated gross reinsurance premium is expected to exceed 2% of the syndicate’s gross written premium

Analysis by the Performance Management Directorate may lead to Lloyd’s imposing certain requirements, which are set out in the Supplemental Requirements.

For the Syndicate the challenge for the syndicate is to identify the problem and take proactively respond in a timely fashion.

Cenata SURE a uniquely proactive solution

With Cenata SURE, all the Reinsurer data is captured and maintained in real time as part of the contract entry. This also includes the easily configured additional parameters for premium income. Our solution is designed to automatically notify both the user and your compliance division as soon as a Reinsurer is added to a contract that does not meet Lloyd’s Performance Requirements.

Also the user will be notified should it look likely any of these conditions will occur in the future. Cenata SURE can also be configured such that ‘auto notifications’ will be sent automatically to the underwriter and/or compliance team for early review and notification to Lloyd’s as required.

Cenata SURE – delivering the right data to the right decision maker at the right time.