The latest news from Lloyd’s of London highlights how even the big names in UK insurance are having to completely change how they do things. The old world of chaps in suits passing slips of paper, or even exchanging banterish emails inbetween quote and bind sessions, are over. Commercial, Reinsurance, Marine, Cyber – these are all part of a truly global, online marketplace. Clients wants results in seconds, not after lunch. Here’s the press release from Lloyd’s plus some reaction below;
Today Lloyd’s launched the Future at Lloyd’s Blueprint One which describes Lloyd’s strategy to build the most advanced insurance marketplace in the world. The blueprint includes details of the initiatives that will be delivered for customers and market participants during 2020.
The publication of Blueprint One follows the unveiling of the Future at Lloyd’s prospectus on 1 May 2019, and marks the first in a series of updates which will be issued at least annually. This first blueprint sets out six ideas of improved ways of working, underpinned by a heightened focus on digital, data and technology to deliver greater benefits to customers.
The document describes the solutions and, importantly, the way in which the ambition set out in the Future at Lloyd’s will be delivered by strong transition and execution planning, followed by a series of phased deliveries.
Phase I will be delivered during 2020 and will include early quick wins, including the launch of an electronic risk exchange which could, over time, process as much as 40% of Lloyd’s risks. In addition, Lloyd’s will pilot a solution that automatically triages claims to speed up settlement and introduce simplified onboarding for Lloyd’s coverholders.
Lloyd’s also today announced that Munich Re will launch the first new “Syndicate-in-a-Box” through its well-established Lloyd’s vehicle Munich Re Syndicate Limited. The Munich Re Innovation Syndicate will begin underwriting on 1 January 2020 with no physical presence in Lloyd’s. It will underwrite a range of innovative lines of business such as renewable energy and parametric insurance for weather risks.”
John Neal, Lloyd’s CEO, said:
“The extensive feedback we have received in progressing the blueprint has confirmed the preeminent place Lloyd’s holds globally in insurance and reinsurance. The plans unveiled today create execution certainty through phased delivery. The support we have enjoyed to date has been essential to delivering Blueprint One and we are seeking the renewed commitment of all market participants to partner with us to achieve our vision to build the most advanced insurance marketplace in the world.”
INDUSTRY REACTION
Commenting on the proposed options for change set out in ‘The Future at Lloyds’ prospectus, Simon Matson, CEO of Gallagher UK, said:
“The future of the insurance market rests contingent on our ability to adapt, respond and remain resilient to increasingly complex emerging risks. Lloyd’s is creating a ‘bionic risk market’, combining the best of the London market’s deep risk and insurance expertise, with innovative digital solutions, but the reforms proposed today are about so much more than digitisation.
“The claims process is ripe for digital streamlining, as are standard risks, but people remain a crucial part of the specialty risk market, and that must never change. People and their requisite specialist skills give Lloyd’s its edge. Innovation, accessibility and the industry’s ability to attract new talent will be crucial to reinforcing the London market’s leadership on the global stage.
“Understanding the risks faced by customers is fundamental. Having specialists attend to those individual risks from a position of knowledge and sectoral expertise is essential to delivering the best customer experience and ultimately, the best possible risk outcome. Broadening the scope of access via both alternative capital and the syndicate-in-a-box are bold moves and could be revolutionary for the London market, increasing both the diversity of firms and depth of coverage which ultimately serves our clients.”
“Whilst we applaud the way in which Lloyd’s is seeking to bring in efficiencies through areas such as increased digitisation, it is paramount that efficiency must not replace advocacy. Our role as brokers has been, and always will be, as the advocate for the customer, which we must continue to do as efficiently as possible.”
LMA REACTION
The Lloyd’s Market Association (LMA) has welcomed the launch of Blueprint One, which provides the latest strategic thinking from Lloyd’s around six ideas, first set out in their Prospectus, alongside a phased execution plan.
Following publication of the Prospectus in May, the LMA initiated a consultation with its membership, the managing and members’ agents community. From this process, a written response to Lloyd’s presented the views of the LMA and its members to help inform the next stages of the Lloyd’s proposal. A number of key points from the LMA’s response feature in the latest plan, namely: a data-first approach to risk placement; a customer centric claims solution; modernised syndication; efficient processes for capital and new syndicates and; focussed efforts on a culture which attracts the best global talent.
LMA CEO Sheila Cameron said: “Lloyd’s ambition to be the most advanced insurance marketplace in the world is achievable, but will be thoroughly dependent on our ability to innovate and evolve our model so that we may continue to offer outstanding underwriting products and services to our customers. It is absolutely right that this is the primary focus of the Future at Lloyd’s, which is why it has the broad support of the LMA and the wider market.
“I am reassured that many of the comments and questions posed in our response to Lloyd’s have been addressed or acknowledged in Blueprint One. We look forward to seeing more detailed development of the six integrated solutions that will form the future Lloyd’s ecosystem and help to shape the development of some of the supporting strands such as modern risk syndication.
“In the coming days and weeks, we will take due care and attention to digest, understand and reflect on the specifics and finer points of the Blueprint and begin a detailed engagement process with our members, so that we can continue to play an important part in executing the plan and shaping the future of our market.”
LONDON FOIL COMMENT
Jennette Newman, President of London FOIL and Clyde & Co partner, comments on: Lloyd’s Blueprint for Change
The blueprint for change has the potential to help safeguard Lloyd’s as London faces up to challenging times ahead – not least Brexit – which may well make life harder for London.
The ambition and scope of change are impressive, but it’s crunch time now as we move from words to actions. The structural changes are substantial and not all businesses will benefit – maintaining a sense of progress will be critical if the blueprint is to deliver.
Binder and delegated authority business traded on the Lloyd’s Risk Exchange is in the vanguard of change and it will be important for market confidence overall that this transitions smoothly. Businesses will also need to see that triaging of claims and the Syndicate in a Box can indeed deliver the efficiency and speed which are so essential to improved performance. To succeed, all of these changes will need to be underpinned by the seamless adoption of new technology.
But we cannot forget the cultural backdrop against which these changes are happening. It will make no difference what structural or business changes are introduced if Lloyd’s can’t demonstrate that a significant cultural shift is underway. Lloyd’s ability to see through a complex modernisation programme hinges on its ability to prove it is the natural home for professional, trusted, high performing and diverse teams.
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