New index will be the first for diversified risk, focusing on insurance performance and showing loss ratios

Lloyd's building

Lloyd’s of London plans to launch its own insurance-based index in mid-2016, focusing entirely on insurance performance and showing loss ratios for the Lloyd’s market on an aggregated basis.

The Lloyd’s Index will be the first index for diversified risk and will provide managing agents, brokers and other insurers with new options for managing risk and form the basis of index-related products of interest to the wider capital markets.

Lloyd’s said its position, as the only insurance market in the world, means it has access to an extensive range of high quality data, both current and historic, and is therefore uniquely placed to provide an index of diversified underwriting risk.

The market intends to publish the Index quarterly, and it is anticipated that additional indices defined by class of business will be available in due course.

Over the coming months, Lloyd’s will seek market input on the initiative as well as discussing appropriate governance measures with the UK regulators.

Lloyd’s chairman, John Nelson, said: “This is an exciting and innovative development for Lloyd’s. Our continued success is dependent on being able to develop the tools the market needs and also reflect the environment it is operating in. I believe this proposal would be advantageous to both Lloyd’s and non-Lloyd’s participants, keeping pace with the evolving insurance industry and the new sources of capital now available. We look forward to hearing the views of the market.”