The non-life syndicates that make up the market reported an underwriting profit of £1.2bn for 2021, according to our latest analysis of individual syndicate accounts.
This is a £3.3bn improvement on the previous year when the market was dogged by claims in the wake of the Covid-19 pandemic, particularly business interruption claims stemming from government-imposed lockdowns.
Gross written premium (GWP) has also been on the rise again after falling by 5% in 2020. The Lloyd’s market reported GWP totalling just under £25bn for 2021 – up 13% on the £22.2bn brought in over the course of 2020.
The market’s performance was buoyed by a 24% reduction in gross claims to £13.5bn, down from £17.7m in 2020. This also takes claims back below 2019 levels when Lloyd’s reported gross claims of £15.3bn.
Property insurance was the Lloyd’s market’s top performing business line, reporting a £510.2m underwriting profit for 2021. This is a marked turnaround from the previous year when it reported an aggregate underwriting loss of £504.7m.
Much of this change in fortunes has stemmed from a reduction in claims, with gross property claims falling by a fifth to £4.3bn.
Indeed, of the seven main business lines that make up the Lloyd’s market, only third party liability failed to turn a profit as it reported an underwriting loss of £33.8m for 2021, although was still much improved from the £475.9m loss from the previous year.
This is in sharp contrast to 2020 when all but two of the main business lines reported an underwriting loss – evidence of how the market has bounced back strongly from the worst effects of the pandemic.
That does not mean that the market is entirely out of the woods, however, with a number of headwinds facing the sector.
The ongoing war in Ukraine continues to fuel the global supply chain and cost of living crises, which will only serve to add further upward pressure on claims costs with inflation remaining a real issue for many insurers.
Rate increases have of course helped the sector – with pricing data from Marsh revealing increases across many major business lines during 2021.
FinPro lines have seen the biggest increases, with global rates rising 31% year-on-year in the fourth quarter of last year. Since then, however, the rate of premium increases has slowed, with global FinPro rates rising by 16% in Q2 2022 – the lowest rate of increase since Q3 2019.
Similar trends have also been found across other commercial business lines in the P&C market as insurers struggle to push through the rate increases that have been commonplace in recent years.
This means that claims and expenses will become a key battleground for many insurers as they look to continue the turnaround that started during 2021.
And insurers can take some solace from the fact that premium growth far outstripped increases to expenses in 2021, with operating expenses rising by just 3% over the course of the year to £7.3bn.
This compares to premium growth of some 13% over the same period, and means that total expenses still remain lower than the £7.4bn of operating expenses reported for 2019.
Want to get a better understanding of the performance of the Lloyd's market? The Insurance DataLab insight platform includes underwriting data on all non-life syndicates that make up the Lloyd's market.