Lloyd’s market message Q3 2023

Posted 20/09/2023 – Quick takes

Patrick Tiernan, Chief of Markets and Dawn Miller, Commercial Director delivered the Lloyd’s quarterly market message on 19th September in advance of the official re-opening of the underwriting floor at Lloyd’s.


Tiernan’s opening remarks explained some key recent achievements by Lloyd’s highlighted by the 85.2% combined ratio as at H1 2023 and with the market on the whole diligently monitoring rate with the property class managing increased insured values effectively. As a result of this work, Lloyd’s is on the ‘front foot’ looking forward.



Tiernan highlighted that casualty (particularly US general liability), geopolitical risks and D&O are the areas which Lloyd’s continues to monitor closely.

  • Casualty rates have generally been underwhelming, barely keeping up with inflation, however, claims awards are increasing significantly (ie social inflation) and Lloyd’s want to try to protect the future profitability of the class. He explained that the casualty reinsurance market compares with the property reinsurance market of twelve months ago and that syndicates should be expecting additional reinsurance costs, therefore, underwriters should bear this in mind going forwards.
  • Lloyd’s is concerned that syndicates are offering insurance coverage for geopolitical classes including SRCC (strikes, riots and civil commotion), terrorism and political violence which is excluded by many syndicates’ reinsurers. Lloyd’s has given fair warning to syndicates and will now be stricter in its approach and any gaps in coverage will require additional capital.
  • Tiernan highlighted that the D&O was seeing ‘irrational’ rate reductions in the class and worse than originally feared by Lloyd’s. This has been mainly experienced in US D&O, however, has spread now to Australia and European D&O risks. He explained that syndicates are expected to manage their portfolios appropriately, including any delegated authority written D&O business.



Tiernan split volatility into natural catastrophe and non-natural catastrophe.

  • He explained that on natural catastrophe, syndicates will be required to look at their data more closely as the number of natural catastrophe events has increased and is expected to continue increasing as a result of climate change. Lloyd’s is also considering whether to increase its number of modelled events (LCM5) to include so-called secondary perils such as US flood, US severe convective storms, US wildfire and New Zealand earthquake (which can be as costly as some primary perils have been in the past).
  • For non-natural catastrophe, Lloyd’s recently introduced two new modelled scenarios including a Taiwan Straits loss event and a systemic cyber loss. Tiernan highlighted that the model suggested that a potential Taiwan loss could be equivalent to a mid-sized hurricane. He also stated that the insurance market as a whole needs to come to a decision on the definition of cyber catastrophe but that it is impossible to mitigate a state-backed cyber-attack hence the mandatory introduction of a war exclusion.



Miller detailed the exciting achievements and initiatives of the Lloyd’s market.


  • The Lloyd’s market is the largest market for both global cyber and US E&S business.
  • Lloyd’s writes $3bn of multinational insurance premiums and has the ambition to be one of main worldwide markets for multinational business.
  • The Lloyd’s Lab has recently celebrated its fifth year anniversary and continues to create innovative solutions and data for the Lloyd’s market.


  • Lloyd’s is creating an acquisition benchmarking tool and a claims dashboard for syndicates which are due to be released at the end of the year.
  • They are continuing the investment into improving data standards and the Lloyd’s Lab.

Alpha comment

The three segments of business that were highlighted by Tiernan are ones which we, at Alpha, are also monitoring closely. Rate reductions within D&O have been significant and several of our syndicates and therefore writing less premium. Underwriters continue to monitor social inflation particularly impacting the casualty book and inflation loads have been put on some syndicates’ reserves to date. It was positive to hear the robust message from Lloyd’s and we hope this translates into strong underwriting action being taken on our behalf. Lloyd’s also continuing to invest heavily into its data and considering to increase its number of modelled perils seems sensible to ensure the future sustainability of the marketplace. The recording of meeting can be viewed here

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