Lloyd’s chief of performance and strategy Rachel Turk has called for discipline and a focus on premium adequacy as rate drops accelerate.

“Performance against plans still looks OK, but first-quarter renewals were a little brutal and rates are coming off faster than anticipated,” she said in a second-quarter market message last week.

“To be clear, we are moving into a softer market and it is happening relatively quickly, and so our oversight needs to adjust commensurately.”

Ms Turk says rate adequacy for next year is coming under threat and market participants must focus on margins, expenses, cycle management and growth that is selective and sustainably profitable.

The message says rate adequacy across some classes is marginal, with a “rapid weakening” direction in property, energy and cyber.

“We can come through this phase of the cycle with strong performance, but only if discipline holds,” Ms Turk said.

“In return, I can commit that Lloyd’s will not return to its failings of the past with inconsistency of judgments, lack of clarity about decision-making, or capital decisions being last-minute and penal.”

She says 10 years ago discipline was inconsistent as conditions softened and “the apathy towards cycle management by many could not be outweighed by the responsible actions of the few”.

“We need to avoid history repeating itself,” she added.

Ms Turk notes the recent Baltimore bridge reserve increase provides a reminder for underwriters of potentially large US liability judgment impacts.

“Warnings about social and claims inflation are normally aimed elsewhere, but this judgment clearly shows a bleed into other lines.”

In cyber, market participants are urged to provide clarity in their approaches to artificial intelligence liability risks, to avoid future problems.

“The risk vectors for cyber continue to evolve and AI adds another dimension and further uncertainty, both by being used by threat actors and raising the question of potential coverage.”

Ms Turk says Lloyd’s is continually assessing insurance implications from the Middle East conflict, but it is not expected to be a capital event for the market or to have a material profit and loss impact. An update will be provided at the half-year results in September.