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NEW YORK—Lloyd’s of London officials are advising New York regulators attempting to revive the New York Insurance Exchange, New York Insurance Superintendent James J. Wrynn said Tuesday.
Speaking at a Manhattan luncheon sponsored by the Assn. of Professional Insurance Women, Mr. Wrynn discussed possible characteristics of the New York Insurance Exchange that the New York State Insurance Department is working to revive. The exchange would be a Lloyd’s of London-style marketplace for insurance buyers and capital providers.
“We’d be a very small Lloyd’s of London,” Mr. Wrynn said. “I don’t want to misspeak to say that we’re going to get a Lloyd’s of London up and running tomorrow. We would start very incrementally.”
Mr. Wrynn said Lloyd’s officials are helping the NYSID in its efforts to revive the exchange—which operated from 1980 to 1987—and are serving on working groups to investigate various aspects of the exchange. Mr. Wrynn, who met with officials at Lloyd’s last week, said the NYIE could be the most technologically advanced platform anywhere for insurance buyers.
“I came back feeling much more confident that even just the technological part of this will provide something for the industry that they don’t have anywhere else,” Mr. Wrynn said. “I think if we make (the NYIE) the most technologically advanced platform, we’d provide something to (the) industry that is not provided right now in Lloyd’s.”
Mr. Wrynn stated several times that the NYIE would not compete with Lloyd’s and noted several aspects of Lloyd’s that the new exchange could emulate, such as having a franchise performance director who would allow new risks only if they are deemed likely to be profitable.
“I think that’s a very important position,” Mr. Wrynn said. “We didn’t have anything like that last time.”
He also suggested that the exchange could provide coverage of emerging risks—such as climate change, nanotechnology, pandemics and cyber security—because New York is home to many experts in those evolving fields.
Another potential niche for the exchange would be to become a port of entry for certain types of reinsurance risk and other excess and surplus lines risks in the United States, Mr. Wrynn said.
That would “be a tremendous advantage to the industry,” he said. “That would be something that Lloyd’s of London doesn’t necessarily provide.”
In addition to the Lloyd’s officials, Mr. Wrynn said 75 insurance industry executives, including more than 50 CEOs, have responded to the department’s invitation to sit on the working groups.
“I wanted it to be industry-driven,” he said.
Mr. Wrynn also said New York Mayor Michael Bloomberg’s enthusiasm for the exchange has helped attract interest from executives at large private equity firms, investment banks and hedge funds.
Separately, Mr. Wrynn defended the department’s recently released regulation on broker compensation disclosures.
“Some people love it; some people hate it, which says to me we struck just the right balance,” Mr. Wrynn said.
The superintendent also said he believes New York must begin taking steps to fund a captive, insurance pool or some other facility to help pay for the losses from a natural catastrophe in New York.
“All the models show that if a catastrophe does occur here in New York, it will be one of the biggest ever,” Mr. Wrynn said. “Even though it’s remote…there is a risk and at some point that risk will be realized.”