On July 10, 2020, Lloyd’s of London (“Lloyd’s”) issued Market Bulletin Ref: Y5299 (the “Bulletin”) announcing that it will seek to relinquish its admitted licenses in Kentucky, Illinois and the U.S. Virgin Islands. The Bulletin states that the decision “was a recognition that the E&S business is a better fit for our underwriters given the market’s innovative nature and expertise in emerging risks.” The Bulletin notes that Lloyd’s will continue to write business under its admitted licenses until July 1, 2021, at which time no new business will be accepted under such U.S. insurance certificates of authority; rather, Lloyd’s will be working on non-renewal plans with local regulators to ensure minimal disruption to policyholders and their respective markets.
The decision by Lloyd’s to concentrate its U.S. efforts principally on issuing surplus lines policies is noteworthy, as Lloyd’s has been a market leader in the surplus lines space and its devotion to the industry further illustrates the strength and endurance of the E&S market. With business practices rapidly shifting and evolving as a result of the disruption caused by COVID-19, organizations are reassessing their risk exposures and tolerance. As such, new products are quickly coming to market to help companies and individuals alike adapt to the “new normal”, and the surplus lines market has historically thrived in times of innovation. Lloyd’s decision further confirms that the surplus lines market is not just here to stay, but rather will continue to likely see expansion in the years to come.
The Bulletin notes that Lloyd’s will provide more detailed guidance in due course, and we will report on any significant developments.