Reform of the lead-follow model and improved process efficiency will be critical in reducing the high cost of accessing the Lloyd’s market, writes Insurance Day’s Rasaad Jamie.
According to Rasaad, “it has been suggested that having more than one lead on a subscription risk might help to provide a solution to the high cost of accessing the market.” Commentators, including BLM’s London Market head, Damian Cleary, point out that having multiple leaders on line slips and multiple agreement parties have been a part of the market for years now and that it has done very little in terms of helping to reduce costs.
Damian warns that while there are opportunities for collaborative arrangement where the lead can seek to obtain and rely on the follow market’s skill sets, this has to be efficiently conducted “behind the scenes” because if it is not, it will only add to the already high cost layers or slow the process down. He strongly disagrees that a multi-lead approach will reduce cost. On the contrary, the more links in the supply chain, the greater the time and cost. “Standardisation comes from the very definition of lead/follow; the more leads you have in the pool, the less standardisation there is. But the lead still has to be accountable to others in the pool,” Cleary adds.
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