Lloyd's risk codes

To the Lloyd's systems, a cyber policy written on Lime Street is first of all two characters keyed in at registration: CY, the risk code the market assigns to data and privacy breach exposures in the US, with CG doing the same outside the US. Every risk placed at Lloyd's carries at least one of these codes, drawn from a list the Corporation maintains and amends by market bulletin from one year of account to the next. The code states the class of business, and nearly everything else follows from it: the mapping to Solvency II lines of business, the allocation of capital in syndicate models, the statistics the market publishes and part of the regulatory filings. When a policy mixes two kinds of exposure, the premium is split across several codes by percentage, and that is often where the mistake gets in. A cyber and liability package coded entirely under a liability code, for convenience, inflates one class and empties the other. The loss ratio of each becomes wrong, so does the comparison with the business plan, and the Corporation, which monitors its syndicates class by class, reads a performance that does not exist. Choosing the code is in principle the underwriter's job, and it then travels with the placement data all the way to claims. Quality checks at the managing agencies catch some of the errors, not all of them, and a late correction means reopening filings already made. Not to be confused with the core data record, which sets the minimum data set of a placement, or with the syndicate business plan, which is nonetheless built on the same codes.