Connect with us
Subscribe to receive industry insights, news and more by emailSubscribe Here
Driving change in the London market
The London market insurance industry may finally have the catalyst for change it so desperately needs with 'The Future at Lloyd's' project and Blueprint One. Launched on 30th September, it promises transformational change through the use of innovative technology to reduce costs and improve efficiency.
The three-phase plan begins in January 2020 and comprises six pillar solutions that will be worked on concurrently. Here we explore how this initiative is different from previous nods towards change that the London Market has made in the past, and assess whether it will deliver the change needed to maintain Lloyd’s position as a leading global insurance market place.
How is Blueprint One different from other initiatives?
The first point to make is Blueprint One appears to have the support of the market. The plan covers the main areas in need of modernisation to establish a secure future for the London Market, namely:
1. A complex risk platform which will eventually be a ‘data-first’ solution
2. A digital Lloyd’s risk exchange to improve the speed of placement
3. A claims solution to deliver a better customer experience
4. A capital solution providing investment opportunities
5. A syndicate in a box to speed up entry into the Lloyd’s market
6. A services hub to deliver new services and enhance existing ones
A collaborative approach is at the heart of the plan. However, given the size of the market and number of participants, coordinating across the market may prove difficult and cause delays to the Blueprint’s implementation.
What are the criteria for success?
Lloyd’s have stated that their goal is to be the world’s most advanced insurance marketplace. Not just in terms of technology, but regarding talent, culture and the working environment. They want to deliver the highest value possible for their customers, offer better access and products and reduce the costs of doing business. Other criteria they have set for success include:
• World-class underwriting results
• Globally sought accreditation
• A system where investors match capital to risk
• A move from a paper-based to a comprehensive digital system
The role of industry bodies in delivering Blueprint One
Lloyd's cannot deliver Blueprint One without the cooperation and constant participation of industry bodies and market participants. Lloyd’s has consulted with industry bodies, regulators and customers since the Future of Lloyd's initiative began in 2018. Their feedback provided the information needed to formulate the plan and regular consultation during the delivery period is crucial to its successful delivery.
With so many parties and viewpoints to consider is what makes the Blueprint so ambitious. Satisfying these different interests, in particular brokers, who feel their role may vanish in the new Lloyd's world, will make or break the project. In order to mitigate this issue, Lloyd's must keep stakeholders informed of progress and ask for feedback to ensure continuous buy-in and the successful implementation of change.
Technology is key
The emergence of new technologies and the increasing importance of data are significant reasons for the creation of Blueprint One. Customer expectations around service have risen, thanks to other industries such as retail using it to improve the customer experience. The result? Increasing customer dissatisfaction with the insurance industry thanks to the reluctance to embrace technology and move away from an archaic, outdated and expensive way of doing business.
Lloyd’s are attempting to take more control over the technology used in the market. However, with individual syndicates and brokers already investing in their own digital systems, Lloyd’s focus may need to change. Instead, it might be better to set standards for the technology used within the market and ensure the network of platforms communicate effectively.
Lloyd’s are hoping to make cost reductions through a reduction in both admin costs and acquisition costs. Automation will make systems more efficient, increase productivity and streamline processes and procedures. However, market participants will need to make initial investments in technology before cost reductions can be made.
Lloyd's also expect Blueprint One’s new claims solution will produce significant cost savings thanks to technology improving fraud prevention and loss assessment. Furthermore, an automated payment system is expected to speed up claims settlement times.
Some challenges of delivering Blueprint One
Vital to not only the success of Blueprint One but the future of the London Market overall is data. The delivery of all six pillars relies on data being communicated in a standard format across the market. A consistent format must be agreed, and existing data needs to be cleansed to make it valuable and compatible with new systems.
According to the Blueprint, Phase 1 of delivery includes defining data standards and structures. The challenge lies in coordinating the market participants, all of whom are using different technologies, data sources and storage solutions to produce a standard set of data. Building a common standard will require extensive cooperation and an agreement to use a universally agreed set of open APIs. Whether this is possible within the target timescales of Phase 1, January to December 2020, remains to be seen.
Another challenge is the size of the project and the vast amount of change required to meet its objectives within a relatively short timescale. The success of Blueprint One depends on a wholesale change to the way business is done across the market. However, there is a question mark over whether this is possible given the number of entities with disparate interests and financial capabilities.
Work needs to be carried out on two levels, both by Lloyd’s as coordinator and market participants as deliverers. But does the market have the skills in place to manage and deliver the project?
High-quality programme management will be essential to make sure the individual technology solutions being implemented deliver the agreed outcomes. The size of the project would indicate the need to bring in external resources to successfully manage the project. Brokers, syndicates and insurers will have to review their current skillsets and bring in staff with data and technology skills. They will also have to retrain their current workforce when new systems and processes are introduced.
On a positive note, the intention and energy behind Lloyd's plans mean market participants and commentators are optimistic it can deliver the transformational change the market needs.
To find out more about how the insurance landscape has changed in the past year and what the Blueprint Plan means for insurers, brokers and syndicates, join us at TINtech London Market 2020. C-suite and thought leaders from across the industry will discuss the upcoming changes and opportunities the Blueprint will bring.