Among the key fields, which the British market has been known for in the global market, the insurance sector deserves to be mentioned first. Landing on the third position in the list of the world’s largest insurance sectors, the British one makes 26% of the total net worth of the entire British market and employs roughly 300,000 residents of the United Kingdom. Moreover, the taxes that the state government receives from the above-mentioned industry make over £10 billion. In fact, only the American and the Japanese markets can compete with the one of Great Britain (Association of British Insurers 2012).
Herein the significance of Lloyd’s Insurance Market lies; being a corporate body that provides insurance related services, it basically creates the premises for designing the insurance strategies, which allow for the maximum solvency. It is quite remarkable that the organisation has a rather humble history. Designed as a coffee house in London in the 17th century, the firm has been growing ever since and was founded as the Lloyd’s as people know it nowadays with the increase in demand for cargo and ship insurance. In fact, it was the ship insurance that made Lloyd famous all over the world: the company provided insurance for Titanic. It is the great fire of London, though, that is considered the starting point of the Lloyd’s evolution (Lloyd’s 2015).
The integration into the state legislation system in 1971 should be viewed as one of the key stages in the company’s development along with the retrieval of its first constitution sixty years prior. The integration of the motor policy in 1904 opened new opportunities for the organisation in terms of vehicle insurance. Finally, in 1911, the aviation policy development heralded another stage in Lloyd’s progress (Lloyd’s n. d.).
When it comes to defining the key specifics of the organisation, one must mention that it is not technically a company, but an insurance market. Naturally, the specified type of operation triggers major risks, primarily, the ones that are related with the financial losses and the liability of the members.
The strategy chosen by the organisation in order to address the risks concerns shaping the organisation to turn it into a syndicate market. As a result, the security from risks, which organisations in the market in question are exposed to, can be reduced to a minimum due to the cohesion between the actions of the members involved. A better information management approach, which allows for the coordination of the companies’ actions, lowers the risks, which the firms in question are exposed to. With 88 members included in the Lloyd’s at present, the principle of split liability can be employed. As a result, the risks that the specified organisations are exposed to can be reduced significantly, and the control of the operations within the firms located in 2000 countries becomes a possibility (Willmer, Diplock & Winn 1967).
The entity, which the Lloyd’s syndicates represent, creates the premises for reducing the risks that cannot be covered by a single syndicate. In other words, it is the collaboration of the members involved that makes Lloyds strong and resistant to the external risks, including both economic and financial ones. Moreover, along with the invulnerability of the Lloyd’s organisation, its ability to monitor the changes occurring in the target market and suggesting the members involved adequate strategies for responding to the above-mentioned alterations.
The capital base, which the company provides along with the set of strategies required for improving the corporate performance, also promotes the further development of the members involved. Moreover, the information management system, which is currently used at Lloyd’s, is impeccable for carrying out key transactions and supervising the actions of the companies. Based on the principle of knowledge sharing and the use of the latest technology, the strategy in question makes Lloyd’s extremely powerful (Davidson 2009).
Despite its resilience, Lloyd’s has seen a range of crises. Nevertheless, the company has managed to survive each of these crises. Still, the recent issue concerning the asbestos losses has triggered a major financial damage to the syndicate and the companies included in it. While being a major concern for the efficacy of Lloyd’s strategy, this experience provides the basis for further improvements in the company’s risk management and prevention of oversights (Adam 1994).
Detecting the possibility for oversights and reducing it to zero is, therefore, the next priority for the organisation. Lloyd’s must design an appropriate risk management strategy, which will help enhance the protection of Lloyd’s policyholders. A study of the recent progress made by the company has shown that its ability to respond to market-turning events quickly is its key asset. Hence, it is crucial for Lloyd’s to develop its information management approach and work on the means to promote a better cohesion between its members. An analytical approach to managing the companies’ portfolios and a flexible system of audits can be considered a decent solution. The incorporation of the FDP policies may be the solution that Lloyd’s needs at present.
Reference List
Adam, R 1994, Ultimate risk: the inside story of the Lloyd’s catastrophe, London, UK, Four Walls Eight Windows. Web.
Association of British Insurers 2012, UK insurance key facts 2012. Web.
Davidson, A 2009, The times: how the city really works, London, Kogan Page. Web.
Lloyd’s n. d., History. Web.
Lloyd’s 2015, History – interactive timeline. Web.
Willmer, L J, Diplock, L J & Winn L J 1967, ‘Fraser v. b. n. Furman (Productions) Ltd., Miller Smith & Partners (a firm) third party,’ Managerial Law, vol. 2, no. 4, pp. 483–492. Web.