The Growth of Enhanced Underwriting in the Lloyd’s Market: The New Normal?
November 18, 2024
Driven by technological advancement and opportunities inherent to the hard market, carriers are increasingly investing in tools and data to support underwriting decisions.
This report provides an objective assessment of the emergence of Enhanced Underwriting propositions in the Lloyd’s market. Drawing on interviews with 85 senior leaders, capturing 77% of Lloyd’s 2023 GWP, we explore the current and future landscape of Enhanced Underwriting – assessing potential growth, impact on the market, and how carriers and brokers are responding.
Elizabeth Jenkin, Underwriting Director at the LMA, said: “Enhanced Underwriting signifies a defining moment for the Lloyd’s market. Although it is still in the early stages of its maturity, this report shows that there is almost universal belief that it will be a fundamental part of Lloyd’s future, presenting an opportunity for the market to apply its deep specialty expertise in new ways. By thoughtfully integrating these models, market participants can drive efficiency, improve risk selection and access underserved business, while reinforcing Lloyd’s position as a leader in complex, high-value risks. In this way, Enhanced Underwriting could reaffirm Lloyd’s reputation as a hub of innovation.”
Some key takeaways of the report include:
- There are four distinct models of Enhanced Underwriting:
- Risk-by-risk underwriting: Augmented Underwriting, keeping the human in the loop, and Pure Algorithmic Underwriting
- Portfolio underwriting: Digital and Algorithmic Broker Facilities, and Active Portfolio Trackers
- Enhanced Underwriting is in its early stages of maturity, accounting for approximately 7% of Lloyd’s 2023 GWP
- All market participants expect growth of Enhanced Underwriting in Lloyd’s in the next 10 years
- Enhanced Underwriting will drive market bifurcation, whereby carriers are adopting distinct approaches to lead and follow business
There has been a significant rise in discourse surrounding Enhanced Underwriting in Lloyd’s. With this report we provide a common lexicon for such discussion, as well as detailed insight into each model and how they could impact the market.
About the authors
Greg Brown is a Partner at Oxbow Partners, Max Deacon is a Principal at Oxbow Partners, Eleanor Ewen is a Senior Consultant at Oxbow Partners, Struan Hancock is a Consultant at Oxbow Partners and Elias Formaggia is a Consultant at Oxbow Partners.
