Lloyd's of London says insurers will need to be picky in 2017, after underwriting turns a loss in 2016

Hayley Kirton
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The insurance market has also issued a number of warnings over what Brexit means for the industry (Source: Getty)

Lloyd's of London has today cautioned that insurers will need to choose what risks they take on in 2017 carefully, after underwriters found themselves in the red in 2016.

Writing in the Lloyd's annual email to the market, chairman John Nelson and chief executive Inga Beale warned the failure for underwriting to make an aggregate profit this year was a "deteriorating and worrying trend" masked by an otherwise "strong performance" in a difficult market.

The pair urged the market to maintain the "underwriting discipline" it had shown over the last year through into 2017.

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Lloyd's also announced it would be cutting its market subscriptions for 2017 by 10 per cent, as it continues to shakeup its structure to control costs.

The specialist insurance market, whose insurers include Beazley and Hiscox, has recently fired warning shots over Brexit, with Nelson previously saying Lloyd's would have to move operations away from the UK if passporting rights for the industry were not secured as part of the Brexit deal.

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"In terms of Brexit, we have continued – both alone and with other like-minded organisations – to make the case to the government for retaining our current trading rights with the EU," Nelson and Beale wrote in their end of year email "At the same time we are finalising our work on alternative trading options...We anticipate sharing the details of our conclusions with you early next year."

Lloyd's is not alone in its concern over passporting, with many across the City worried about how they will be able to continue to serve clients across the EU following Brexit.

Figures released earlier this year by the Financial Conduct Authority revealed more than 13,000 firms use passporting rights to trade either from the UK into EEA member states or vice versa.

Lloyd's is also branching out further overseas, with the duo noting today they had recently received approval to open a reinsurance branch in India and discussions for licences in Malaysia were at an advanced stage, while Lloyd's China now has 32 syndicates on the platform.

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