Jon Hancock, Lloyd’s Director of Performance Management, spoke at the recent ALM Annual Conference on plans for 2017 structural changes which aim to drive growth, incorporate latest technologies, reduce currently “unsustainable” distribution and admin costs and adapt to meet emerging market risks.
Lloyd’s is working to introduce a series of performance enhancing strategies after the marketplace, like the rest of the re/insurance industry, has struggled with loss of profit, leading to a large-scale restructuring effort and reduction of “unsustainable” distribution and admin costs.
The Corporation of Lloyd’s, the body that oversees and supports the Lloyd’s market to ensure efficient operation, will find its headcount reduced by around 10% in the upcoming organisational restructure.
The effort involves introducing new strategies to enhance market growth, attract top talent, improve data analysis, methods of measuring market progress and reducing operational costs.
Lloyd’s is working to keep abreast with market challenges by improving performance supervision, Hancock said; “To protect the Central Fund in this challenging environment, our syndicate oversight activity is focusing on all elements of combined ratio, rather than almost exclusively on loss ratios.
“At individual class level and aggregate level, we will continue to focus on loss ratio and downside risk management. Given current conditions, improved performance means the market should shrink in 2017 and 2018 as underwriters maintain strong discipline.”
Lloyd’s managing agents and brokers are adopting the London Market Target Operating Model (TOM) initiatives that have been developed to reduce market-wide costs over time.
Lloyd’s systems upgrade includes managing agents and brokers adopting the London Market Target Operating Model (TOM) and a pilot scheme with six managing agents of various sizes being rolled out as part of the Corporation Operating Model (COM) programme.
The market is moving to an account management system for managing agents that works to align clients with the right expertise for their sector and Hancock said Lloyd’s aims to have this account management available to all managing agents by the end of the year.
“We are also compiling a services catalogue to define the business services we currently provide to the market. Once that’s finished, we will consult with you to make sure that what we are offering is fully aligned with your needs and to identify where we need to make changes,” Hancock added.
In addition to upgrading its business model, Lloyd’s has laid out strategic plans for growth, placing an important priority on key emerging markets.
Hancock said; “Earlier this year, the market started underwriting on Lloyd’s platform in India and should be based in a permanent office in Mumbai by next January.
“We are continuing to develop the coverholder model in China and have formalised sub-delegation in Singapore.”
Meanwhile, in its established markets, Lloyd’s coverholder and specialty insurance is driving growth, maintaining Lloyd’s leading position in the segment, Hancock said “the pace of U.S. E&S growth in the first quarter remained strong and, with premium tracking 10% higher than in the same period last year.”
The Lloyd’s innovation team has worked to identify a number of emerging risks, covering liability exposure management, city resilience and a new earthquake model for the Middle East.
Lloyd’s is also supporting Oasis – a new shared services platform for accessing risk models – as it responds to the changing risk landscape.
Hancock said Lloyd’s is working to incorporate artificial intelligence into its use of data to drive its operational improvements and identify new product opportunities.
To continue to attract and develop top talent, the insurer will be piloting making Lloyd’s University – currently only accessible by Corporation staff – widely available to the market.
