Insurance and reinsurance marketplace Lloyd’s of London has released a new document outlining how the first phase of its strategy for change will be delivered, following the launch of the Future at Lloyd’s prospectus back in May.
Blueprint One proposes to enhance Lloyd’s value proposition to customers by offering better insurance solutions, simplifying access to products and services, reducing the cost of doing business, and building an inclusive and innovative culture.
These goals will be underpinned by a heightened focus on underwriting performance, data, technology, modern syndication of risk, and culture and people, Lloyd’s explained.
Phase I of the strategy will begin from January 2020, following a period of transition and planning that is due to commence on October 1.
This initial phase will consist of delivering “a mix of quick wins, together with a series of initiatives” that Lloyd’s believes will have an immediate impact on the market.
These include a set of defined data standards and structures, a risk exchange that could process as much as 40% of Lloyd’s risks, and a claims solution pilot that includes a triage engine for automatically segmenting simple, standard, and complex claims.
It will also see an initial tranche of capital platform pilot use-cases and a refined set of rules for capital at Lloyd’s, as well as a new framework and rules-set for leadership.
“The extensive feedback we have received in progressing the blueprint has confirmed the preeminent place Lloyd’s holds globally in insurance and reinsurance,” said Lloyd’s CEO John Neal.
“The plans unveiled today create execution certainty through phased delivery,” he remarked. “The support we have enjoyed to date has been essential to delivering Blueprint One and we are seeking the renewed commitment of all market participants to partner with us to achieve our vision to build the most advanced insurance marketplace in the world.”
“This first Future at Lloyd’s blueprint marks an exciting new chapter for Lloyd’s,” added Chairman Bruce Carnegie-Brown. “It sets out how we are going to combine data, technology and new ways of working with our existing strengths to transform the culture we work in and everything we do – from placing risks and paying claims to attracting capital and developing new products.”
“Blueprint One is deliberately ambitious,” Carnegie-Brown continued. “When we asked you last year how we should change, you told us to be bold. You said this is Lloyd’s best opportunity to build a relevant and successful market for the future – and that we must seize it.”
“You also told us to maintain a high level of ambition while making sure the plan is achievable. We will do this by delivering the Future at Lloyd’s in stages,” he explained.
“A phased approach will allow thorough testing of each component and will accelerate our time to market. This means we will start delivering value to customers and the market quickly. We will regularly communicate our progress as we move through the phases.
Blueprint One lays out four ways the new ecosystem is expected to enhance the current Lloyd’s market value proposition.
Firstly, it will enable customers to choose from a wider and more innovative range of insurance products by allowing business to bring new products to market faster, supported by technology and capital.
Next it will build on the work of the London Market Target Operating Model (LM TOM) to redesign core activities, making it simpler and more efficient for customers and market participants to trade.
Lloyd’s also aims to significantly reduce the cost of doing business in the market, and aims to create efficiencies by using standardised data, automated processes and administration, and IT solutions that allow participants to plug directly into Lloyd’s ecosystem to trade.
Similarly, the costs of processing and settling claims will be reduced by using technology to assess losses and automate payments, while a services hub will give access to shared and bespoke services.
Lloyd’s believes that digitisation, automation and simplification could reduce the cost of doing business from 40% to 30%, with the potential for lower-cost channels to reduce this figure further.
Initial analysis from the design labs suggests up to 40% of volume will eventually be traded on the risk exchange and 15- 30% of claims would be straight-through processed.
Finally, the market will focus on building a more inclusive and diverse culture, after the results of a recent survey exposed widespread issues of harassment and employee wellbeing.
“This is a special time to be working at Lloyd’s,” Carnegie-Brown concluded. “The changes we are making over the next few years will last for generations and will secure the future of this market we are all so passionate about. I have no doubt we have the ambition, the plan and the commitment to succeed.”
Lloyd’s said it will pursue three potential funding opportunities to finance the goals outlined in Blueprint One, with options including the use of surplus funds and cash, raising senior debt, and securitising against future income flows of the market.