Capacity and cycle management at Lloyd’s

There is an increasing consensus within the Lloyd’s market about the need for capacity to be linked to cycle management. However, Rolf Tolle, head of the Franchise Performance Directorate (FPD) at Lloyd’s believes there will always be natural, and in his opinion, healthy tensions between capital providers, rating agencies, regulators and market businesses as well as potentially between market businesses and FPD. In a recent speech to the Insurance Institute of London (IIL), Mr. Tolle argued that underwriting capacity at Lloyd’s is not an absolute but will always be a relative measure which takes into account a number of different factors such as market capacity, cycle management, approval of business plans, performance monitoring, adherence to standards and guidelines and transparency. In this edited extract from his IIL speech, Mr. Tolle looks at the relationship between capacity and cycle management at Lloyd’s

Every year at this time, there is frenzy to discover what Lloyd’s capacity is. Up until last year, this was a key fixture on the Lloyd’s calendar and the figure was used as a barometer to illustrate the market’s strength. No other insurance company publicly announces how much business they are intending to write to their competitors and now thankfully nor do we any more.