The six principles, set out in a new report, will encourage "stronger, smarter oversight" of the market following any future market-turning events (MTEs), according to Lloyd's. "We want to make it easier for syndicates to do business by focusing our oversight efforts on the important things," said Jon Hancock, Lloyd's director of performance management. "One important area where we can help is to make sure the Lloyd's market is in a position to act swiftly and decisively to any future market-turning events." "We don't want to impose overly burdensome requirements on syndicates or insist on any unnecessary processes or paperwork. We want to make it as straightforward as possible to raise new capital. Doing so will ensure that Lloyd's is even better prepared for once-in-a-generation market turning events," he said. Managing agents should begin considering the possible implications of an MTE on their own business, and prepare suitable contingency plans, Lloyd's said. The report comes in response to a dry-run exercise conducted by Lloyd's and the UK's prudential regulator, the Prudential Regulation Authority (PRA), last year. The PRA published its own policy statement on MTEs at the start of the month. An MTE is an event triggered by a significant insurance loss leading to a chain of consequences among insurers, reinsurers, regulators and the market. These consequences may include solvency issues and even failures among firms, and material changes in premium rates. The last major global MTE came in the aftermath of the US terrorist attacks of 11 September 2001, after which premium rates across all classes of insurance business rose by around 40%. More than half the new reinsurance capital raised globally in the immediate aftermath of the attacks went to Bermuda, according to Lloyd's. The principles set out in the report are aimed at ensuring that the market responds to an MTE effectively, remaining solvent while paying claims as quickly as possible. They are split into two broad categories: crisis management, and opportunities to support the market. Lloyd's primary focus in the event of an MTE will be on the stability of the market, ensuring it is solvent and liquid enough to ensure prompt payment of claims to affected policyholders, according to the report. It will also ensure that the run-off of any members or syndicates that fail following the MTE is managed in an orderly fashion, to minimise any wider impact to the market. Lloyd's will also take a lead role in coordinating and communicating any relevant data with regulators, governments and rating agencies. When managing the response to an MTE, Lloyd's intends to adopt a "commercial and pragmatic" approach, according to the principles. This may include accelerated capital plan reviews and approval processes, and prioritising activities in support of existing businesses ahead of new entrants. Lloyd's has also set out internal restructuring plans to ensure that it is best placed to respond to an MTE, and may require staff to temporarily suspend all non-essential activities in the event of an MTE in order to support the market.
Lloyd 's of London has issued a six - point plan for companies to prepare for a cataclysmic event that could test the insurance industry 's resilience . Following a test of the UK insurance industry 's ability to deal with multiple market - turning events last year , Lloyd 's has said its members and shareholders should have measures in place to deal with a real global catastrophe , such as the 9/11 terror attacks , in an orderly manner . Jon Hancock , Lloyd 's director of performance management , said the company must " make sure the Lloyd 's market is in a position to respond swiftly and decisively to any future market - turning event " .