Decile 10 initiative (Lloyd's)

Lloyd's launched Decile 10 in 2018, after a two billion pound loss for 2017; 2018 would lose another billion. The market had never seen underwriting discipline imposed on that scale. The name refers to the bottom decile of each syndicate's book, meaning the 10 percent of lines with the worst results. Two groups were targeted: syndicates that had lost money three years running, and the whole market for its decile-ten lines. Each had to submit a detailed recovery plan for approval by the Corporation of Lloyd's, or be barred from writing those lines. The exercise was large. Around a fifth of the market had to file a full plan, and some seven billion pounds of premium, 20 percent of total volume, was remediated within a few years. The least profitable lines, led by certain financial lines, had by themselves wiped out 162 percent of the 2018 result. The capacity withdrawn as a result, on top of loss experience that was already trending up, set off the financial lines hard market of 2019 to 2022. The episode shows Lloyd's acting as a de facto market regulator, imposing a discipline that competition alone would not have produced.