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Roundtable: What’s next for the modernisation of Lloyd’s and the London market?

WNS roundtable
Back row, l-r: Kade Spears, divisional head, The Channel Managing Agency; Sameer Deshpande, head of enterprise architecture, PIB Group; Dan Lott, head of consultancy services, Tysers; Brett Jesson, practice lead UK & Europe insurance, WNS; Kim Darrington, senior executive of market modernisation, International Underwriting Association; James Livett, associate director, London & International Insurance Brokers’ Association; and Vince Wooding, corporate senior vice-president, WNS. Front row, l-r: Paul Davenport, finance director, Lloyd’s Market Association; David Marock, CEO, Charles Taylor; John Muir, managing director of technical and operational practices, Willis Towers Watson; Tony Cheffings, governance and controls manager of operations, Talbot Underwriting; and Lee Dunne, deputy head of aviation, Apollo Syndicate Management

Against a background of the winding down of the Target Operating Model and the publication of the Future of Lloyd’s Blueprint, Post, in conjuction with WNS, invited industry experts to discuss the six suggested proposals to modernise the market. Post asked the attendees what could work and what lessons need to be learned from the past when creating the future

How do you see the transition to the complex risk platform, as part of the Lloyd’s Blueprint One, working?

John Muir: From a broker standpoint, the whole complex risk strategy sounds to us a sensible thing for Lloyd’s to focus on. The whole notion of triaging non-complex work, which we’ve always seen as being largely done under binding authorities and the like, is a sensible route to go down to declutter small business and put complex business where it belongs.

James Livett: The concept is good, but as has been said many times before, the devil will be in the detail. The blueprint is still quite an unrefined document. There needs to be greater consultation with the market. The other key thing with the complex risk platform is – it desperately needs to have a greater involvement with the wider market not just Lloyd’s. It cannot be Lloyd’s-centric.

David Marock: What is interesting from our perspective is trying to understand, what is Lloyd’s intention with its participation in Platform Placing Limited? What is its aim? And the blueprint is very clear that it is data first, data driven solutions.

What can be done to make sure the complex risks platform is a success?

Kade Spears: I spend most of my life working with clients in complex risk, and really listening to what those clients have to say. In none of my discussions over the past 12, 18, 24 months have any clients really said, “What platform are you using? Their questions are more basic.

What Lloyd’s is doing is bold in that it is trying to address that fundamental issue, which is why are we so terrible as an industry at providing basic data and information about what we’re doing? Whether it’s complex risk or less complex risk, Lloyd’s is trying to address that. Because that’s what I’m hearing from clients. They want that data, they want that information and unless we’re creating it ourselves, as a market we’re struggling to give that to them.

Sameer Deshpande: I agree, we need to standardise the data requirements here and move away from platform or product specific discussion. In our group we have got multiple broking platforms. In order to automate it, what is more important is to actually understand it, regardless of what the system is, what data is required and what is the vendor relationship with Lloyd’s.

Kim Darrington: The carriers are scared to ask the brokers to do more, the brokers don’t want to do more unless they have impetus or good reason to. But if we move as a market and can collectively work out a way to collect what we need from the right places and augment a good record of data can this be propagated throughout downstream systems. But without agreement and partnership with the brokers and the company market into Lloyd’s, there is no way that single force of nature can carry that.

Why should Blueprint One work where other modernisation effort have failed?

Darrington: We tend to beat ourselves up quite a lot and consider that failure to deliver everything that we set out to do five years ago is a failure to deliver. That’s not entirely true, because change should be constant and evolutionary. If we weren’t looking at new ways to structure programmes and new ways to modernise or optimise processes more frequently than every time we get to the very bitter end of the last programme, then we would be doing ourselves a massive dis-service.

Marock: Technology in general has changed the market, things that you couldn’t do five years ago, the cost of implementing the driving and the change, for example, are far more viable. The ability to interface different existing solutions is far greater now than it was.

Dan Lott: I’m really fascinated by the nature of adoption. Because we all use email now. No one’s told us to use email, we just do it. We just adopt those things. Lloyd’s tried to introduce the Bridge, and the trouble with the Bridge was it wasn’t intelligent connectivity in the first place, and it didn’t bring in the brokers to actually explain to us what was going on. There was no narrative in that discussion at an early enough stage.

Brokers do the triage of what’s a good risk and what should be brought into the market in the first place. We do a lot of work around a coverholder. Getting them ready, coaching them to bring them to a managing agent’s table, and that was lost with Lloyd’s, it didn’t understand.

Claims automation – is that realistic with all the barriers in the market?

Muir: It’s [Lloyd’s] talking about dealing with the 3% of our volume of claims, which actually take up 66% of the value. I’m quoting from the blueprint. Because of that we believe that we’re doing a great job. We’re not. It’s the 97% that is our problem. And Lloyd’s is so right in identifying that.

Lloyd’s has decided, rightly, that the speed of travel of doing things collaboratively right across the whole global subscription market is so slow as to be a dead stop. So what it has decided to do is take a chance and try and see if it can get it to succeed as a Lloyd’s enterprise.

Darrington: The sophistication of claims handling for some of our lenders is entirely on their own paper. When they’re not writing subscription risks, they do a lot of triage. There’s a lot of auto settlement of claims within certain scenarios and limits. I’m sure they’d love to see that across their subscription market business, because at the moment it’s somewhat lacking, frankly, by comparison.

There are definitely elements of the blueprint that are entirely within Lloyd’s gift to drive and control without input from the company markets, but claims is not one of them. I say that because by the time a subscription risk is written and a claim comes off the back of that, there are already multiple parties in that value chain and we’re always going to be one of them.

Who do you see as the winners and losers if Blueprint One is fully realised?

Tony Cheffings: If a $500 claim ends up getting paid much more quickly than they do currently then that’s a big win.

Paul Davenport: [Lloyd’s] is going about this very differently from all the previous Darwinian-type efforts. I’m not necessarily saying that that’s going to succeed, but I’m just saying it’s different.

If you went to the brokers and asked what they think about the blueprint, you’d get a plethora of reactions but probably the most common reaction would be ‘wow, this is really ambitious. Some of it sounds hugely complicated’. It is not a criticism, it’s just an honest observation.

Spears: If you’re ahead of the curve you’re already doing a lot of the things that Lloyd’s has laid out in the blueprint, and the people who are going to lose are the people who are not taking this blueprint seriously, whether you’re in Lloyd’s or outside of Lloyd’s. The reality is this is a highly competitive industry.

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