The COVID-19 pandemic has reinforced the importance of modernising Lloyd’s and helped soften some of the cultural resistance to change, according to analysts at AM Best.
As part of its execution plans for the first phase of strategy, Lloyd’s confirmed earlier this year that it was aiming to take a 40% stake in the London market’s electronic placing platform (PPL), which will form part of its new risk platform.
Priorities for 2020 included the investment in and development of PPL, improvements to claims processes (including an automated settlement pilot), and a new digital solution for coverholder business as part of the Lloyd’s risk exchange.
Lloyd’s was also hoping to focus on data and technology architecture, lead/follow (modern syndication of risk), and middle and back office transformation as foundational initiatives in 2020.
AM Best notes how Lloyd’s is expected to report strong operating performance across the underwriting cycle, taking into account potential volatility due to its exposure to catastrophe and other large losses.
During 2019, there were a number of natural disasters that resulted in meaningful losses for the market but, in aggregate, major losses were lower than those experienced in either 2017 or 2018.
The market’s operating expense ratio is around 40%, according to analysts, and while this is high compared with its peers, the ratio has been largely stable over the past five years.
AM Best believes the actions being taken through the Future at Lloyd’s initiative to reduce the cost of placing business at the marketplace should start to realise benefits over the short term.