Lloyd’s is taking a strong stance on managing delegated underwriting authorities. Rachel Turk, the chief underwriting officer at Lloyd’s, emphasized the importance of oversight in her recent market message for the second quarter of 2025. She expressed concerns about the potential risks associated with poor management, recalling past issues with managing general agents (MGAs).
Turk stated that if coverholders are not effectively managed, Lloyd’s will limit the ability to delegate authority. This caution comes as the market shows a desire to increase delegation, whether through traditional MGAs, new algorithmic trading methods, or structured facilities. However, Turk warned that this could lead to over-capacity and lower rates, which would harm the market.
Currently, delegated authorities account for nearly 40% of all business at Lloyd’s. Turk pointed out that the term “delegated authorities” covers a wide range of arrangements, including consortia, single broker facilities, line slips, and cross-class broker facilities. Each of these has its own risk profile, and she stressed that managing agents need to have a clear strategy for using delegation.
For MGAs looking to join Lloyd’s, the bar is set high. Turk explained that syndicates should only support MGAs that add value and possess the necessary data capabilities for proper oversight. She made it clear that syndicates need a dedicated team with strong actuarial and data expertise to handle large, multi-class facilities.
Turk also stated that passive participants—those who do not actively manage their business—will not be allowed to write these facilities. Lloyd’s is requiring syndicates to have a clear strategy for soft market conditions, including key performance indicators (KPIs) that would trigger decisions to exit unprofitable business.
Patrick Tiernan, who will become Lloyd’s CEO on June 1, echoed Turk’s sentiments. He emphasized the need for proactive management to avoid future issues. Tiernan noted that maintaining discipline and profitability is crucial, as poor management could lead to significant problems down the line.
Turk reiterated the need for vigilance, stating that while issues with coverholders have not yet arisen, it is essential to prevent them from developing. She highlighted the importance of being proactive rather than reactive in the current market environment.