An Insurance Syndicate is a group of companies or underwriters who come together to insure something (usually a complex or unique risk that is otherwise not insured by your typical commercial insurance company).
Lloyd’s of London is one of the most common places in the world where syndicates are highly active.
In order to understand Lloyd’s Syndicates better, you need to first understand Lloyd’s market better. You can refer to our explanation of Lloyd’s here. In short, Lloyd’s is a specialist insurance market where insurance providers (people who are in the insurance business looking for profit in terms of premiums – could be wealthy individuals or corporate) and insurance buyers (people who are looking to insure an unconventional risk like Mariah Carey’s legs) come together and negotiate business. It is very popular for its access to a variety of underwriters and syndicates who can come together on negotiating terms and decision to cover a particular risk very quickly.
Now, how do you think Lloyd’s market does this kind of business? Through ‘Syndicates’.
Llyod’s members form various syndicates (image something like a small company or a registered group of investors) specializing in a particular category of risk (for e.g special architectural buildings or human body parts of popular celebrities) who employ highly skilled underwriters who can sit with your broker, discuss, negotiate and form an agreement.