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The world has become extremely complicated. This leads to the establishment of various businesses and organisations that do not directly deal with the buying and selling of goods and services. Instead, they offer auxiliary services like insurance, banking, warehousing, transport, communication and advertising. Insurance is one of the largest investments in the world, accounting for more than thirty per cent of the global money circulation. This is possible due to the increase in the number of inevitable business risks. This discussion explores how Lloyd’s manages the performance of its syndicates and its claims management structure and procedure.
Management of the Company’s Syndicates
Lloyd’s Company started three hundred years ago by shipowners. They organised meetings at Edward Lloyd’s coffee store with people who had disposable capital. They met and planned to ensure their marine businesses. Lloyd’s has developed to offer a market for insurers against risks (Howard, 2008). It is not an insurance company, but a market that offers underwriters, the market for their capital. Moreover, it offers space for brokers and clients who want to access insurance services. Syndicate refers to a group of people (underwriters) who pool their resources to safeguard various investors against risks. Lloyd’s Company boasts of a large, unique capital layout that provides reliable security (financial) to its clients. The syndicate’s managers set central and members’ capital to obtain funds that will guarantee members safety on their investments (Taylor 2005). According to the structure of this company, funds are available in three levels known as links. The first and second links hold funds in forms of trusts. These are meant to benefit policyholders that have contracts with the company through agents and brokers. Every member is responsible for underwriting his or her account, and their liability does not extend to other members. All mutual assets held by Lloyd’s Corporations are available in the third link and get approvals from Lloyds Council.
In addition, the syndicate receives premiums from policyholders (Howard 2008). These are available in its trust funds (premiums) which are usually in liquid assets to pay policyholders who claim compensations against risks. The syndicate ensures policyholders are aware of looming liabilities and subsequently make adequate provisions for them before releasing profits. Moreover, syndicates are responsible for collecting funds in forms of capital from policyholders. These funds support membership or corporate underwriting in the company. The syndicates then submit an ICA (Individual Capital Assessment) that outlines basic capital to cover the risks under its jurisdiction. Underwriting is a key role played by the syndicates. They are also in charge of issuing various policies to their clients to cover them against risks. They ensure clients pay capital to facilitate their compensations (Taylor 2005). Policyholders contribute this capital in terms of premiums according to the volume and nature of their operations. These premiums account for the majority of the capital in Lloyd’s Company. The syndicate manages risks in two forms. This is possible through the liquid assets held to inform of premium trust funds. These funds are easy to access to compensate policyholders whenever losses occur. They also cover other company liabilities that occur in the process of its operations. Members underwrite their accounts in order to cover their own liabilities.
The capital requirement for each syndicate depends on the number of policyholders in their registers. In addition, the premiums collected from policyholders also play crucial roles in determining the capital necessary for operating any syndicate. The amount of premium each member or corporation pays depends on the nature of the policyholder (Hedges 2009). Risky business operations and those that involve a lot of capital usually have higher premiums than those facing fewer risks and have limited capital. The business plans of this company’s syndicates include underwriting and maintaining market control while offering insurance brokerage services to the population. The company offers various insurance covers to investors through brokers. They underwriters offer various covers depending on the nature of their operations. Holders of various covers place the risks they want to cover their policyholders inform of insuring their investments (Raphael 2011). After companies place the risks, they place them under the syndicates that suit their description. Customers provide the capital to run these syndicates in the form of premiums. Lastly, Lloyd’s Corporations support the company market by determining the number of premiums policyholders pay for these policies. They also coordinate with the management of syndicates that register dismal performance to improve their ratings.
Claims Management Structure and Procedure
The structure of the claims department is focusing on providing efficient, reliable and timely compensation packages to policyholders. A board of directors working together with the executive department of the company is in charge of managing the affairs of the syndicate. The compensation procedure begins from when an individual buys a policy with the company. Every syndicate has a business plan that outlines the requirements for compensations (Hubbard 2009). This includes minimum and maximum requirements for a claim to be deemed valid. All policies have targets and objectives that must reflect the guidelines provided by syndicates’ business plans and regulations. The director of the agent in charge of management oversees the operations of the claims board to ensure there are total commitment and transparency in disbursing compensations (Crouhy 2005). The whole process of claiming compensation for damages felt begins when a client accepts the terms and policies of his or her cover.
After the occurrence of damage, the policyholder informs the syndicate in charge of providing policies to members. The syndicate sends its representatives to access and evaluate the loss. This stage involves evaluating the applicability and credibility of the loss. This means the loss must meet the minimum requirements for compensations. This is the most crucial stage of compensation since it determines whether the claim is applicable with regard to the loss insured (Fraser 2010). The process also involves evaluating the extent of the loss in monetary form to know the degree of loss. Policyholders should ensure they understand the policies and covers this company offers in order to avoid disappointments when claiming compensations. After assessing and evaluating the damage or loss suffered by a policyholder, the syndicate receives a recommendation to compensate the policyholder with the amount or quality of loss incurred (Coleman 2011). Finally, the company compensates the policyholder and issues a certificate of compensation to the policy. However, the policyholder must ensure his or her premium records are up to date before claiming compensation.
Lloyd’s Company is, without doubt, one of the market leaders in providing insurance services to investors through intermediaries. The increase in risks associated with inflation, terrorism and natural calamities force investors to secure their investments. Lloyd’s Company safeguards investors’ energy and capital against unforeseen calamities.
Coleman, T. (2011). A Practical Guide to Risk Management. Research Foundation of CFA Institute, Virginia.
Crouhy, M. (2005). The Essentials of Risk Management. McGraw-Hill, New York.
Fraser, J. (2010). Enterprise Risk Management: Today’s Leading Research and Best Practices for Tomorrow’s Executives. Wiley, New York.
Hedges, J. (2009). Insurance Directory and Year Book: Insurance Companies, Lloyd’s Syndicates. Timothy Benn Publishing, New York.
Howard, L. (2008).Insurance Directory: Insurance Companies, Lloyd’s Syndicates, Unit Trusts. Harper Business, New York.
Hubbard, D. (2009). The Failure of Risk Management: Why It’s Broken and How to Fix It. Wiley, New York.
Raphael, A. (2011). The Ultimate Risk: The Inside Story of the Lloyd’s Catastrophe. Four Walls Eight Windows, New York.
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Taylor, S. (2005). Report highlights strength of Lloyd’s of London market. McGraw-Hill, New York.