The Lloyd’s Capacity Auctions were introduced in 1995, and now take place once a year. They gave Members the ability to trade capacity in Lloyd’s syndicates, and replaced the system whereby Members’ Agents acquired capacity for their Members. The next Capacity Auctions are being held in September and October 2011.

Both MAPA and bespoke Members have to purchase their syndicate capacity at the annual Lloyd’s Capacity Auctions, if a new Member elects to join the new HAL then all of the auction decisions are undertaken by the MAPA manager.

The cost of acquiring capacity though the Auction process is the major up-front cost associated with new membership of Lloyd’s. Members should be aware that the cost of acquiring capacity through the auction process has varied from year to year, but in recent years there has been an increase in the overall price. The main reason for this increase has been the fact that the amount of capacity put up for sale in the auctions has reduced considerably in recent years.  2005 saw £263 million of syndicate capacity traded through the Lloyd’s Auctions, but the volume of capacity traded had reduced to only £161 million in the 2010 auctions.   By 2010, the average cost of acquiring capacity in the Auctions had risen to over 30p per pound of capacity. However, the HAL new Members’ MAPA managed to acquire its portfolio for a lesser amount HAL believes that the best way for new members to enter the Lloyds market is by means of joining the HAL new members MAPA.

HAL requires all new Members to pre-fund the purchase of their capacity prior to the auctions.