aggiehawg said:
Quote:
That's not how it works for good reason. Lloyds of London is an insurance market place with hundreds of autonomous syndicates that assume risks on a quota-share basis in many different classes according to their own business model and risk appetite. Many syndicates are capitalized (owned) by major US insurers like AIG, Navigators, Zurich, etc. It's a global marketplace and is where marine insurance was first written back in the 1600's when it was literally a coffee shop named Lloyds.
My understanding is that Lloyds has reinsurers to limit their own pro rata exposure. If their reinsurers don't sign on, it isn't issued. Those reinsurers are not so much competition as a coalition.
Is that correct?
It depends on how deep you want to go. Most direct insurance companies, including Lloyd's syndicates will reinsurer a portion of their book. This can be done in many way, shapes and forms.
The same large global insurance carriers (MunchRe, SwissRe, AIG, QBE, etc) including Lloyd's syndicates are also part of the Reinsurance market (they write both direct insurance and reinsurance). In the past, as you can imagine, this has created a death spiral and the Piper Alpha north sea platform loss in the 80's almost took down the market due to the incestuous reinsurance towers. Things are more regulated and organized now but that just gives you an idea of some of the complexities with large reinsurance programs that utilize most of the available global capacity.
In any event, most blue-water marine risks globally will be covered by one of only a handful of P&I (protection & indemnity) clubs which are essentially mutuals. P&I is just a fancy marine insurance term for property & casualty. These P&I clubs will then reinsure a large portion of their risk within the commercial reinsurance market. So that is what you are seeing referred to in the news. Many of these reinsurers will be Lloyd's syndicates along with other non-Lloyds reinsurers such as those mentioned above.
Here's the deal with all of this. You can't insure a burning house. It is therefore not uncommon for carriers/underwriters to have cancellation provisions triggered by war. Most policies flat out exclude war to begin with. Marine insurance policies generally include it, subject to 3-7 day cancellation provision to allow them to reevaluate, reprice in order to reinstate coverage (if they so choose) given the increased exposure. I posted about this on another thread. This is NOT gouging....it's sound underwriting.
