Does FTA’s long-term agreement with Lloyd’s stabilise rates for that 3-year period or will these rates be subject to regular volatility that comes with performance?
Our rates haven’t changed…ever!
At FTA we write for profit; profit for brokers, Lloyd’s and ourselves – we are not driven by premium.
We cannot speak of other insurers or underwriting agencies in terms of how they address risk and/or manage their portfolio’s but we do understand that some of our risk selection is best in the market. It is for this exact reason that FTA has the broadest security out of Lloyd’s.
Our approach? We generally take a proactive approach to specific areas or an entire industry where systematic issues occur and exists. Think of under strength concrete, defective structural design, architects, certifiers etc. We either avoid this type of industry or provide more restrictive terms which is generally driven by FTA and not its Lloyd’s capacity.
Most of our brokers have probably witnessed firsthand that we underwrite each and every one of its risks and ask very specific questions in relation to this risk, whereas history shows, that many underwriters were only too keen or overzealous in attractive GWP to their books.
For far too long, wholesale brokers or underwriting agencies could not care less about the underwriting results of its capacity providers or shareholders and this has become evident in the current market. Capacity is now being withdrawn, including investments into Lloyd’s, and very few agencies are left standing with top shelf paper and authority to match. This in itself has caused, and continues to cause, volatility.
For example, you may have seen over the past 3 – 4 years that a target D&C is often prejudiced in its coverage and pricing offering by an insurer or underwriting agency.
Think of a mixture of D&C single project cat loss policies or heavy civil D&C or where it has gone into its Architects and Engineers book. As such, you will often find the same D&C policy with a premium that has now been hiked by 1000% due to a portfolio remediation of insurers and underwriting agencies.
FTA only applies an increase of renewal pricing due to the increase of risk profile (ie. contract sizes, revenue increases etc.) or simply to try to keep in line with the hardening market, which is best for all parties. It is seldom to do with loss ratio, or any rate revision driven by Lloyd’s or ourselves. We are also still the only Lloyd’s agency to offer $20m D&C capacity.
As previously advised, we cannot speak for others, but we can advise that our portfolio is incredibly profitable, hence we are the only Lloyd’s financial lines agency that is on a 3-year renewable binder which has recently been renewed for a second time.
Our guidelines and rates, originally agreed back in 2017, have not changed over this period and will not change for the next 3 years. The only changes we have made is improved risk selection which helps us to avoid catastrophic losses on our book.
Proof is in the pudding when FTA had another 2 syndicates wanting to come on this year but sadly missed out due to time constraints us already being happy with our current (oversubscribed) binder.
We like to assure our Brokers of how we tackle the current market challenges and to pinpoint that we don’t like volatility just as much as you and your clients!