For many years—perhaps as long as program business has been around—the London market has played a role. “London is active in delegated underwriting for program business,” explains David Soper, director in the U.S. Property & Casualty Division of Tysers, an independent international Lloyd’s broker. “It is something they are very attuned to.”

Program administrators often turn to Lloyd’s and the London market for what could be called out-of-the-mainstream business. “Lloyd’s is well suited for specialized business,” adds Richard Hodge, also a Tysers U.S. P&C divisional director. “The expression ‘niche product,’ whilst overused, is a good description for what Lloyd’s and London look for.”

Soper believes the London market offers a number of advantages for program administrators. “Lloyd’s has stood the test of time,” he explains. “It has been around for well over 300 years. With that comes a brand name, a reputation.” According to Soper, tapping into the brand can bolster program administrator marketing efforts.  Another advantage involves licensing. “Within North America, Lloyd’s is licensed in all states on a surplus lines basis,” he adds.

Expertise is another plus. “With the historical involvement with delegated underwriting comes a certain comfort,” Soper notes. “They understand the business, the process, the claims, and the service needed to support program business.”

Soper cites flexibility as another draw. “There is a willingness in the London market to adapt products for market cycles and conditions,” he explains. “Lloyd’s recognizes there is no point trying to compete with standard admitted markets for standard products, but there is a willingness to adapt—perhaps to wrap around existing products or to write the products standard markets don’t want.”

That flexibility offers more advantages. “With surplus lines, you have freedom of form and rate,” Soper explains. “This gives you the ability to be more creative.”

Often, Hodge notes, Lloyd’s is a market for supplemental coverages. “They are very interested in programs, not necessarily big programs, and often sit alongside an existing surplus lines or admitted program,” he says. “This can help program administrators gain a competitive edge.”

While niche programs are certainly a London forte, it is not the only program business the market writes. “Through existing relationships with program managers,” Hodge explains, “Lloyd’s underwriters are involved in ‘standard’ programs, something many people may not realize.” The same holds true for traditional property and casualty coverage. “Does the London market write mid-market and commercial property around the United States? Absolutely,” he says. “But again, those activities are generally built on existing relationships.”

Most often, programs that find their way to the London market are those that are not welcome in standard U.S. markets. “Lloyd’s underwriters are very willing to listen to an argument as to why a product or facility will work,” Hodge says, “whereas if you are talking to a typical U.S. carrier, they might say, ‘No, I’m sorry. We can’t work with you on that, because it doesn’t fit into our box.’”

“The London market is always looking for new programs,” Soper says. “What many program administrators find attractive is that there is no minimum premium requirement per se, although it must make sense to all parties. Lloyd’s will look at anything down to, perhaps, first-year premium of a half-million dollars.” Likewise, he adds, there is little pressure for immediate growth.

Hodge expects the London market’s interest in program business to remain strong, and even to grow. “It gives them access to business that they wouldn’t necessarily be able to access otherwise,” he explains. “Plus, with program business, they are dealing with people who have experience on the street, who know the customers, and who know the product and how to market it.”

For program administrators, a key to effective use of the London market is alignment of goals and expectations. “Everybody needs to be on the same page in terms of expectations,” Soper says. “Long-term relationships are built on trust and the belief and understanding that everybody is heading in the same direction.”