Algorithmic follow syndicate

In a subscription market the lead underwriter prices the risk and sets terms; followers supply the remaining capacity on the same terms. For a long time each follower re-examined the file. That second review duplicated the analysis without changing the outcome, and added to the running cost of the whole market. The algorithmic follow syndicate draws the conclusion. It writes down its appetite once and for all as a set of rules (sector, geography, limit, lead quality), then commits capacity without individual review as soon as the rule is met. Underwriting judgment moves off the risk and onto the portfolio and the choice of leads to follow. The model has one flaw and one merit. It concentrates analysis on a small number of lead underwriters, so the market depends more on their quality. But it makes explicit an appetite that had stayed implicit, and for the first time that appetite can be checked and audited.