Lloyd’s, on 13 January 2026, published its Market Oversight Plan for 2026, setting out how it will oversee managing agents and syndicates under the Principles-Based Oversight (PBO) regime. Lloyd’s positions 2026 as a pivotal year: PBO is now well embedded, but oversight will remain risk-based and agile as market conditions evolve. The plan’s priorities centre on sustainable market performance (including underwriting discipline in a softening market and a continued spotlight on delegated business) and enhancements to oversight delivery, including closer co-ordination with the PRA and clearer framework expectations and timelines.
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What does this mean?
Firms operating in Lloyd’s should expect continued challenge on underwriting discipline as conditions soften, with Lloyd’s looking for evidence of proactive portfolio management where performance is weakening. Lloyd’s also signals increased attention on expense management and investment in infrastructure/technology as part of maintaining sustainable performance.
Delegated business remains a major focal point. Lloyd’s highlights that delegated authorities represent a significant share of market GWP and that deterioration can be less visible and harder to remediate. This aligns with the PRA’s recently published supervisory priorities, which include an expectation of improved delegated business oversight. Lloyds highlights the need for robust controls, portfolio management and, critically, data availability/quality. From January 2026, each managing agent will be assigned a dedicated Delegated Authorities (DA) Oversight Manager, using structured engagement and lifecycle reviews to build a holistic view of the firm’s delegated capability.
The plan also signals a step-change in oversight co-ordination. Lloyd’s states that, from 2026, the PRA intends to leverage Lloyd’s oversight activity where possible, supported by a more granular co-operation framework between the two. In practical terms, this points to closer alignment of the PRA’s supervisory strategies and the oversight of firms within the Lloyd’s marketplace by the market’s principles-based oversight regime. Indeed, examples include the more streamlined authorisation process for new managing agents and better alignment between Lloyd’s oversight planning and PRA priorities. All of which help with reducing duplication and creating a more joined up approach.
Firms should also prepare for market-wide exercises and continued PBO evolution. Lloyd’s references the DyGIST exercise being run across the UK insurance industry from May 2026, noting a proportionate approach based on syndicate maturity/materiality (including potential out-of-scope syndicates and reduced qualitative reporting where losses are not material). Lloyd’s is also exploring changes to capital setting options, including a 2026 pilot to develop how partial internal models could work in practice (with guardrails to mitigate under-capitalisation risk).
On PBO mechanics and reporting, Lloyd’s points to:
Ongoing refinement of materiality metrics (including planned reviews across non-natural catastrophe, reserving and capital-related expectations).
Increased lifecycle transparency and oversight differentiation through introducing PBO categories for new syndicates after their first year of trading (rather than after the third year).
More specific submission dates for Board attestations from 2027, when attestations must be submitted on or before 31 March or 30 June.
Annex 1 of the Market Oversight Plan provides a principle-by-principle view of where Lloyd’s expects tangible 2026 action. Notable examples include the following:
- new credit risk codes for the 2026 Year of Account and an updated RDS collection from 1 July 2026;
- continued cyber scenario refresh work;
- a more principles-based approach to high outwards reinsurance leverage (including plans for best-practice guidance on shared reinsurance and development of a reinsurance failure test);
- follow-up on Consumer Duty implementation;
- continued focus where claims handling is delegated;
- the introduction of cyber resilience metrics for operational resilience (replacing the previous survey), with first data requested by June 2026.
What do firms need to do?
Demonstrate underwriting discipline and active portfolio management that withstands challenge as market conditions soften.
Strengthen delegated authority governance and data capability, including readiness to engage with Lloyd’s dedicated DA Oversight Manager.
Get ahead of 2026–27 oversight changes and milestones, including DyGIST, new/updated data returns and evolving PBO expectations.
Firms should notice increased focus on sustainable underwriting and Lloyd’s desire to see disciplined underwriting in softening market conditions. Actions firms should consider include stress-testing their underwriting, reviewing portfolio management assumptions for a softer market, and being clear in their rationale and evidence for why they’re pricing appropriately. Ensuring plans and forecasts are credible and defensible to Lloyd’s oversight will be key.
Firms should prepare for the introduction of DA Oversight Managers. Early positive engagement with these managers will be important, matched with focus on governance and data to adequately monitor and oversee delegated authority arrangements. Robust frameworks and expectations around delegated authorities, informed by MI, are essential in identifying deterioration and arising issues on this topic.
It is essential to adequately plan for upcoming oversight enhancements and changes. Firms should map likely reporting/data requests, prepare for DyGIST, and ensure readiness for the cyber resilience metrics. Annex 1 of Lloyd’s Market Oversight Plan sets out in granularity changes and upcoming focuses for the year ahead; firms should take time to acquaint themselves with these.
Next steps
Firms should familiarise themselves with upcoming 2026 milestones including DyGIST from May 2026, the updated RDS collection from 1 July 2026, and cyber resilience metrics first requested by June 2026.
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