Lloyd's Agencies: ILS Will Widen To Cover More Risks, Including Cyber

A survey by the Lloyd's Market Association (LMA) of Lloyd's managing agents found that 80 percent of Lloyd's agencies want insurance-linked securities (ILS) as a permanent re/insurance market fixture.

The association polled senior executives from 25 managing agencies. More than two-thirds see a potential use for the new UK ILS framework in the next 12 months, 60 percent would like to see Lloyd's Central Fund diversify its sources of capital through ILS, and 100 percent believe ILS transactions will widen to cover more risks, including cyber and legacy business, in the next 3 years.

Lloyd's of London is an association of independent underwriters operating in England. It is not an insurance company; rather, it operates as a marketplace for large and/or unusual insurance exposures where brokers representing insurance applicants are able to contract with underwriters offering coverage.

— International Risk Management Institute, Inc. (IRMI), Glossary of Insurance and Risk Management Terms

The research provides insight into the concerns, opinions, and priorities of LMA members. Significant findings include the following.

• 88 percent would like to see London leverage its underwriting expertise to gain access to currently uninsured risks using ILS capital
• 36 percent of respondents believe Lloyd's framework will need to change to accommodate more use of ILS

Ken Curtis, LMA director of finance and risk, said, "This research shows that market participants are extremely supportive of increasing the use of ILS generally, and doing so at Lloyd's in particular. The new UK framework has already been tested by a Lloyd's syndicate, and the market will explore ways to make future transactions even simpler and more efficient."