The Lloyd’s of London insurance and reinsurance marketplace has announced an update to its Electronic Placement Mandate, increasing the target on risks bound for all classes to 90% by Q2.
The electronic placement target has been 80% of risks bound throughout 2020, and will remain so during the first quarter of next year.
But this will be raised to 90% in the second quarter and will be maintained at this level through to the end of the year, Lloyd’s has now confirmed.
Electronic placement has been a key pillar of the Future at Lloyd’s modernization program, and the challenges of the COVID-19 pandemic this year have only emphasized the importance of digital capabilities in the marketplace.
To encourage syndicates to meet the new targets it has laid out, Lloyd’s is implementing incentive rebates for compliant managing agents, and additional fees for those that fall short.
For instance, if the placement targets are met, members of a syndicate will receive a rebate on their annual subscriptions equal to the percentage by which they exceeded the target, multiplied by 1% of their yearly subscription fee.
In contrast, if targets are not met, a managing agent will be required to contribute to the costs of modernizing the Lloyd’s market systems and processes. These fees will be based on the percentage by which the target was missed, multiplied by the annual subscription fee of the syndicate.
Additionally, if a syndicate fails to achieve at least 50% of the new electronic placement targets in any quarter of 2021, then its managing agent must submit a remediation plan on how it will meet further targets.
Lloyd’s first introduced a mandate for electronic placement for syndicates in 2018. Initially, and from Q2 2018, the mandate required all syndicates to write at least 10% of their risks electronically, rising to 20% in Q3 and 30% in Q4.
In July of 2019, the marketplace then outlined a set of updated targets for its electronic placement mandate, which meant that from the third-quarter of 2019, each syndicate would be required to have written no less than 60% of its risks using a recognised electronic placement system, with the target rising to 70% in Q4. The target was later upped to 80% beginning in January 2020.