Implementation of Solvency II at Lloyd’s
“The association of underwriters known as Lloyd’s” is the authorised EU insurer. This concept which appears in existing EU insurance directives means that a single collective authorisation is granted that applies to all Lloyd’s members.
The collective authorisation is managed by the Society of Lloyd’s. Solvency II’s provisions therefore apply to the association as a collective entity, although it is open to the FSA to decide precisely how it wishes to apply particular regulatory provisions to Lloyd’s and its members.
Lloyd’s (with input from the LMA Solvency II High Level Group) and the FSA are engaged in negotiation to determine the precise details of how Solvency II will be implemented at Lloyd’s. The key outcomes from these discussions are:
- Lloyd’s will seek FSA approval of a single Lloyd’s internal model which covers the activities of “the association of underwriters known as Lloyds”
- Lloyd’s and the FSA expect every managing agent to develop syndicate-level internal models which meet Solvency II requirements.These internal models will form key components of Lloyd’s internal model
- Lloyd’s will continue to set member level capital
- Duplication between the FSA and Lloyd’s will be minimised
Lloyd’s programme plan for the successful implementation of Solvency II across the Lloyd’s market identifies five workstream objectives:
- Successful implementation at Society level
- Successful implementation syndicate level
- Capital levels
- Internal model approval
- Effective lobbying and communication.
The High Level Group receives regular updates from Lloyd’s on the progress of these workstreams and discusses any issues arising.