The LMA is encouraged by the continued movement towards electronic placement within the London market. But there is still work to be done before syndicates, brokers and buyers of insurance and reinsurance are truly deriving the benefits that electronic placement, and the data it can produce, will bring.
In May 2019, the Placement Platform Limited (PPL) board announced that 78,000 risks had been bound on the platform.
During the last quarter of 2018, PPL announced, 100% of Lloyd’s syndicates reported under the mandate from Lloyd’s for syndicates to meet various targets for electronic placement.
More than 76% of Lloyd’s syndicates met or exceeded Lloyd’s target of 30% of in-scope risks to be placed via a recognised electronic placement system in the final quarter of 2018.
Indeed, on average, in the final quarter of 2018, Lloyd’s syndicates accepted 39% of in-scope risks electronically – almost meeting the 40% target set for the first quarter of 2019.
While the move towards electronic placement has been spurred in large part by the Lloyd’s mandates, we have seen a general shift to a position where underwriters and brokers have now accepted that electronic trading is a good thing for the market, not simply something they feel they have to do. And this must be welcomed.
We believe, however, that there is a need to get electronic earlier in the transaction. If electronic placement was used earlier in the submission process, not only would this improve efficiency and reduce keying errors, for example, it would begin to enable underwriters to extract truly meaningful data. It is our hope that electronic placement platforms can become more than administration tools.
We hope, of course, that a move towards electronic trading will help to reduce Lloyd’s expense ratio. But we believe it can be more than that.
The need for human value-add, the real underwriting skill on which this market rightly prides itself, should never be underestimated. But we believe that an increased use of electronic trading could, for example, arm underwriters with better, straight-through data to enable them and brokers to more effectively and efficiently negotiate coverage.
Simon Clegg, Atrium Property Underwriter and Chairman of the LMA Worldwide Property Business Panel, agreed, commenting: “There will always be a place for the added value of a London broker; PPL does not change this. However, there needs to be wider acceptance that brokers can broke risks face-to-face with submission information and the slip presented on PPL.
“Underwriters can agree the slip there and then using PPL with no paperwork changing hands – much more efficient and the whole transaction is recorded.
Technology, we believe, can help to underpin that negotiation; it will never replace it.
Published 22 July 2019