Lloyd’s has identified three objectives for post-Solvency II implementation:
1. Agreement with the Financial Services Authority (FSA) to maintain the supervisory “status quo”;
2. Approval of a single internal model for Lloyd’s;
3. Each syndicate to reach Solvency II standards.
Regarding the first objective, significant progress has been made in ensuring that Lloyd’s can continue sharing the regulatory burden with the FSA. This will enable Lloyd’s to keep the regulatory burden placed on each syndicate at a sensible level, with minimal duplication.
The second objective is a considerable challenge in implementation for the Lloyd’s team and integration with syndicate-level models, as well as ensuring the FSA can review and approve the model before the Solvency II launch in 2013.
While progress has been made in the third objective, a meaningful proportion of the market - 22 managing agents, as of June 2010 - has not yet reached the required standards expected at this point. Five of the 22, or approximately 3% of market premium, were identified as being “significantly behind market/peers.”
Guy Carpenter is confident that if Lloyd’s successfully achieves these objectives, it will be in a strong position to maintain its competitive advantage and maximize the opportunities available through the provision of brokered Solvency II solutions to European markets.