Since Lloyd’s first announced the blueprint for its Future at Lloyd’s project on Sept. 30, it has been busy working to get the ideas off the page and convert them into a set of actions that can be implemented during 2020.
Lloyd’s today announced it is ready to deliver the first phase of its transformation project, starting with a 40 percent investment in PPL (the Lloyd’s and London market electronic trading platform), which will form part of its new complex risk platform. Lloyd’s also confirmed that the first Lloyd’s risk exchange pilot will be trialed in 2020, connecting broker and insurer e-trading portals.
“We’re coming out of that transition and planning phase,” so Lloyd’s can start executing on Phase 1 of the project, which begins in March, said Jennifer Rigby, Lloyd’s chief operations officer (COO), at a media briefing this week to describe the progress that’s been made and what’s ahead.
“We’ve got advisory boards and executive sponsors set up for all the programs we’ve got. There’s been an awful lot of market engagement in what we’re doing,” said John Neal, Lloyd’s chief executive officer, who also spoke at the media briefing.
Lloyd’s has spent the last few months working with stakeholders to prioritize and plan the workstreams, which will create the foundations for The Future at Lloyd’s project. Rigby said the principal work during this transition period involved governance, finance and people, which she described as follows:
- Governance. The market’s work on governance is vital in order to make sure “we’ve got strong governance set up for the program.” This includes strong senior support within the market through advisory committees and a decision to tailor Lloyd’s own governance by creating a new subcommittee of the Council of Lloyd’s, called the Technology and Transformation Committee. “That’s really important because it means we will have that subcommittee giving a huge amount of time and attention to the program and then reporting that up through to council,” said Rigby.
- Finance. “We couldn’t start delivering the program without having the right financing and funding in place,” Rigby noted. As a result, the market last year raised £300 million (US$389.1 million) in senior debt. On top of the market’s reserves, Lloyd’s now has cash of £400 million “to be able to finance whatever investments we think we need to make,” said Neal. “It doesn’t mean we think it will cost £400 million, less or more. It just felt appropriate for us to ensure that we’ve got funds available” for the needs of the program.
- People. Market leads have been appointed for each of the solutions being developed, new recruits have been hired from inside and outside the market, and Lloyd’s has found the “right partners” to help deliver Phase 1 solutions, said Rigby. “The final piece is market engagement,” she said. “We’ve continued that all the way through. It’s built into the governance. It’s built into the delivery model. And during the transition period, it’s been so important because it has helped us prioritize what we’re doing.”
“I am thrilled with the progress we have made during transition. We are now ready to start building the Future at Lloyd’s, having achieved three major objectives: securing finance, setting the governance structure, and detailing the plan for the next 12 months and beyond. I am excited about the opportunities the Future at Lloyd’s offers to our market and grateful for its support as we move the ideas from strategy into reality,” said Neal in a statement issued by Lloyd’s, which provided a Blueprint One progress report.
Lloyd’s also announced the launch of a new website, so market practitioners and business partners can track the progress of Blueprint One through all its phases.
“We have for 2020 a very clear set of priorities,” which the market emphasized are at the top of the list of priorities. “Short-hand, we refer to them as ‘3 plus 3,'” said Rigby during the media briefing, noting that the first three are those that will deliver the most initial impact and value to market participants in 2020.
These three quick wins for the market are: 1) the complex risk platform, including the next generation of PPL; 2) Lloyd’s risk exchange, including a digital coverholder solution; and 3) the claims solution where some quick value can be delivered to the market in terms of process re-engineering, for example, which will build toward a new claims platform.
The next part of the 3-plus-3 priorities involve three important foundational components, which are essential parts of the Future at Lloyd’s infrastructure. Rigby said they are: data and technology; lead/follow; and middle and back office, including accounting and settlement.
Data and technology “clearly provides all the standards, the infrastructure to make the integration solutions work, to make this a plug and play eco-system for the future that will let us then plug in other value-added services and … components into that infrastructure,” said Rigby.
“The Future at Lloyd’s will be enabled by technology. In 2020 we will focus on defining API gateways and delivering APIs for various proofs of concept and pilots,” said the new Blueprint One website. “A single source of structured, standard data will underpin the marketplace of the future.”
The second part of the three foundational priorities is the so-called “lead/follow (modern syndication of risk)” program. “Lead/follow seeks to deliver best-in-breed underwriting by leaders while making it simpler and cheaper for followers to follow,” said a description on the Lloyd’s Blueprint One website. “New lead/follow standards and an oversight framework will be designed and piloted. This activity will be led by the Lloyd’s Market Association.” (Lloyd’s traditionally acts as a subscription market where the lead underwriter agrees to terms and conditions while following underwriters provide additional capacity.)
The third foundational component involves mid-and-back office, which is focused on delivering a centralized, simplified and automated accounting and settlement service, plus other support capabilities for the Future at Lloyd’s, said the Blueprint One website.
In a comment about the Blueprint One announcements, Christopher Croft, CEO of broker representative body LIIBA (the London & International Insurance Brokers’ Association), said the accounting and settlement process is an “absolutely foundational area where we worry not enough attention is being paid. Brokers are still asked to do too much on behalf of insurers—significantly more than in any other insurance center—very little of which is visible,” he added.
He welcomed the “fundamentals first” approach that Lloyd’s is taking with Blueprint 1A (or Blueprint Phase 1) and a focus on the bread-and-butter basics of business in the market.
Other Blueprint One Deliverables
In parallel to the 2020 priorities, Lloyd’s will continue to move forward with the ideas laid out in Blueprint One for delivery in 2021, which include a prototype of the “data-first” version of the complex risk platform; new capital investment opportunities, including through the syndicate-in-a-box framework; and a commitment to ongoing cultural change, said Lloyd’s in a statement.
Several of these initiatives are already delivering results, said Lloyd’s. For example, in January, Lloyd’s confirmed that Marine Hull and International Casualty Binders classes of business will be taking part in the first lead/follow (modern syndication of risk) pilot, which will begin in early Q2, led by the Lloyd’s Market Association. Also, in January, Lloyd’s specialty insurer Brit Ltd. launched its “Sussex Specialty Insurance Fund,” which offers alternative capital such as insurance-linked securities (ILS) investors and improved access to the Lloyd’s market.
In response to high demand from the market for ways to get involved, Lloyd’s said it has also launched an online talent portal that provides individuals with details of full- and part-time opportunities as part of Lloyd’s digital transformation.
*This story ran previously in our sister publication Insurance Journal.