First Syndicate-in-a-Box at Lloyd’s to feature parametric risks from Munich Re

German reinsurance giant Munich Re is set to be the sponsor of the first “Syndicate-in-a-Box” to be launched under the new Lloyd’s rules that aim to make it simpler for start-up underwriting operations to access the benefits of being a Lloyd’s market participant.

Lloyd’s created the so-called syndicate-in-a-box to provide a way for new entrants and innovative business models to more readily access and get set up in the market.

It’s a lighter touch way to participate and operate at Lloyd’s, with all the benefits for the central fund backing, global licenses and access to risk, but without the need for the costly and time consuming application process and set-up for a full syndicate in the market.

Munich Re explained that it sees the launch of its Syndicate-in-a-Box as a vehicle it will dedicate to “the design, launch and incubation of innovative insurance products within Lloyd’s.”

“Launching this new syndicate at this time underlines Munich Re’s long-standing and emphatic commitment to innovation,” the global reinsurance firm explained.

The Syndicate-in-a-Box will work with Munich Re’s underwriting teams to bring new and innovative classes of business into Lloyd’s, with a specific focus on emerging risks, green energy solutions, autonomous vehicle development and insurance to mitigate the financial risks of extreme weather events, including products that use parametric triggers.

Parametric insurance for weather and climate exposures is currently undergoing something of a surge in profile in the market, as finally the sector has realised that parametric structures can provide much needed contingent risk transfer solutions and also cover risks that are currently underinsured.

Munich Re has long provided parametric insurance and sometimes reinsurance solutions, including weather derivatives and weather index insurance products, so to see it bringing this line of business into Lloyd’s is encouraging as it signals a broadening of its appetite and also perhaps suggests the reinsurer sees this as a growing opportunity as well.

Munich Re’s Syndicate-in-a-Box will operate under its existing Lloyd’s vehicle Munich Re Syndicate Limited, but will have no physical presence itself in Lloyd’s.

As a result it provides the reinsurance giant with another route to leverage the efficiencies the Lloyd’s market can offer, as a way to incubate new risk opportunities and innovative lines of business.

Dubbed the Munich Re Innovation Syndicate, it will begin underwriting on January 1st 2020 across a range of innovative lines of business, with the parametric insurance for weather related risks an area that helps Lloyd’s meet one of its goals, in bringing risks into the market that aren’t as frequently placed there.

Peter Roeder, Board Member of Munich Re, commented, “We are very pleased to house Lloyd’s first SiaB in Munich Re Syndicate Ltd, and we believe that this will not only benefit Munich Re, but will provide significant advantages to the wider Lloyd’s market, which we remain fully committed to.”

Munich Re expects to leverage its already existing actuarial, modeling and other resources it has within the Lloyd’s market, to enable the first Syndicate-in-a-Box to be run in an efficient manner.