How long do Lloyd's syndicates typically wait before they 'close the year'?

Lloyd's syndicates typically wait three years before they 'close the year.' This practice is rooted in the nature of the insurance business and the process of claims management. When a syndicate underwrites an insurance policy, it doesn’t always immediately know the total extent of its liabilities for claims that may arise from that underwriting.

The three-year period allows sufficient time for claims to be reported, processed, and finalized. This is particularly important in fields like liability insurance, where claims can emerge well after the policy period has ended. By closing the year after three years, syndicates can ensure a more accurate assessment of their performance and financial results, enabling them to distribute profits or adjust reserves appropriately. This timeframe also helps manage uncertainties surrounding potential late-reported claims and provides a clearer picture of underwriting profitability.