After conducting a successful stress test of its electronic trading system last week, Lloyd’s has made the decision to close its underwriting room in response to the coronavirus outbreak.
As a result, market insurers will no longer be able to conduct face-to-face underwriting in the Lloyd’s building for the foreseeable future. Instead, they are working from their offices, or remotely from home, trading electronically.
“Last Friday, Lloyd’s closed the underwriting room to test that the market could trade electronically via PPL or the emergency trading protocols,” said John Neal, Lloyd’s CEO, in a statement. (PPL is the London market’s electronic trading platform.)
“I am pleased to say that this test of the market’s resilience went well and should provide confidence in our collective ability to trade electronically,” he added.
“To date, Lloyd’s underwriting room has remained open for business. On a typical day we see a footfall of around 5,000 per day; however, this fell to 1,000 on Monday and under 200 [on March 18],” Neal said. (By “footfall,” Neal was referring to people with Lloyd’s passes who can enter the building on One Lime Street in London).
“Given that most insurance firms have put in place remote working, coupled with the advice from the UK government to avoid non-essential contact, Lloyd’s Executive Committee has…decided to close the underwriting room with effect from 16:00 on Thursday, March 19, 2020,” he continued.
“We have taken this decision with a heavy heart and a commitment to review the situation on a weekly basis. The Lloyd’s building at One Lime Street will remain open for tenants, though this may change in the future.”
In a separate move, Lloyd’s has asked market insurers to provide estimates of their potential current and final losses from the coronavirus pandemic, a move that is designed to help the insurance market understand its possible overall losses.