The Lloyd’s of London marketplace has announced that it is to issue a mandate for electronic placement, which will require syndicates to progressively write more of their risks electronically.
After Q2 2018, all Lloyd’s syndicates will be required to write at least 10% of their risks electronically, rising to 20% in Q3 and 30% in Q4, with further targets to be confirmed later in the year.
Lloyd’s claims the mandate will encourage the market to transition from paper to digital and realise the benefits of electronic placement.
Furthermore, Lloyd’s will offer syndicates a rebate as a financial incentive if their managing agents meet the required targets, and will charge additional fees if they fail, using the proceeds to contribute to the costs of modernising market systems and processes.
The mandate, which awaits approval from the Lloyd’s Board and Council, has been developed after extensive discussions between members of the Lloyd’s market, the Lloyd’s Market Association (LMA), the London & International Insurance Brokers’ Association (LIIBA) and the International Underwriting Association (IUA).
Inga Beale, Lloyd’s Chief Executive Officer (CEO), said: “We must ensure that Lloyd’s and the London market moves together and continues to prioritise its modernisation efforts. We have agreed the scope and requirements for the electronic placement mandate.
“Those that adopt electronic placement in line with the mandate will receive incentives, in recognition of their increased efficiency. Those that fall short will be required to contribute towards the costs of modernising the market.
“We have a system that works and that supports face-to-face negotiations. Adoption by the market will increase efficiency, reduce back office costs, and most importantly improve customer service.”
LMA’s CEO David Gittings added: “The LMA Board supports the introduction of a mandate to encourage electronic placement across the London market, and it is pleased that the recommendations it made earlier in the year to encourage adoption are being taken forward.”
Chris Croft, CEO of LIIBA, also commented: “The LIIBA Board welcomes the proposal made by Lloyd’s to mandate use of an electronic trading platform. We have supported its adoption since PPL was first initiated and there is clear evidence that the platform now provides a sound basis for the placement of London market risks.
“Already 29 brokers are on the platform, and in the last three weeks we have held meetings with another 20 of our members to encourage them to sign up and get involved. We will continue to work with our members and insurance partners to drive further adoption.”
Additionally, CEO of the IUA Dave Matcham said: “PPL can only be successful if it is widely used across the London market and supported by enhanced capture of data in a structured manner. Growing volumes and take-up for the system across multiple business lines is an urgent priority for 2018.
“The mandating of electronic placement by Lloyd’s will undoubtedly provide a significant boost for these objectives. The IUA supports this initiative and will continue to actively promote and engage members in paperless electronic trading. Many IUA members have already demonstrated clear support for PPL and I strongly expect this to accelerate further in the coming months.”
The electronic Placing Platform Limited (PPL) was initially launched in 2016 for standalone Terrorism business, but now hosts 36 lines of business, with 29 brokers and 93 carriers signed up.