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15 July 2021 | 5-minute read
First published by Insurance day, 13 July 2021
In November 2020, the LMA embarked on Project Dare to address the underlying issues causing the steady decline of premium from delegated authority (DA) partnerships into London. All participants in the global DA market were invited to reimagine a new DA operating model.
After a period of intensive collaboration and global engagement with 174 managing agent representatives, 75 coverholders, 32 brokers and delegated claims agents, the concepts and outputs of the project were unveiled in late June.. This clearly showed the vision shared by many DA stakeholders is for a digitally connected marketplace, minus the cost and complexity that is driving premium away from Lloyd’s. Such strong consensus made it clear the model of choice was one capable of not only arresting but reversing declining DA revenues into the Lloyd’s and London markets, by creating transparency and value in the processes of distributing and servicing business, while removing uncompetitive and repetitive tasks.
A value-driven distribution model has been conceived to meet these aims including transparency of acquisition costs and related activities:
- Reduced acquisition and expense costs via B2B distribution, depending on product type and DA partner.
- A flexible approach to distribution partner activity, with a product service tower that directly links costs to value via fixed, percentage point remuneration.
- Greater competition in a way that benefits the market, distribution partners and policyholders .
- Real-time and data- driven portfolio and performance oversight from risk to claims, enabling a proactive management of conduct and service delivery.
Armed with a clear vision from the market, the LMA’s Delegated Authority Committee (DAC) was able to devise a data-driven and digitally enabled model that far exceeds the existing one in all pre-placement, placement, and post-placement activities.
The new business process is a solution that fulfils the market’s stated vision for DA. Next steps have been identified in creating a digital and connected marketplace that will reduce the cost and complexity of trading with Lloyd’s via product creation; capacity matching; oversight and performance management and portfolio and claim management.
While the ongoing Future at Lloyd’s (F@L) reform continues to deliver important foundational DA improvements, the focus to date has largely been on regulatory and compliance activity, developed around current standards, regulatory requirements and existing processes while replacing legacy applications.
The vision arising from project Dare meanwhile has been tested against Blueprint Two and its delivery roadmap for DA, with productive engagement continuing with Lloyd's. Yet it is not a given that this end-to-end vision for DA will be implemented and, as the model is refined further, the next stages of its development will be critical. This will involve concluding the analysis of Dare’s compatibility with F@L and how it might meet or exceed F@L requirements. This process will change and influence how Dare is further developed, but it is also likely to produce positive challenge of the data and design principles within F@L whilst in parallel challenging and developing the business practice change that can transform how we distribute business and is in no one dependant on expensive technological delivery.
While Dare has been instigated and facilitated by the LMADAC, it is ultimately a vision from the market for the market, which also requires agreement and a joined-up approach between the LMA, Lloyd's and LIIBA to address the opportunities that the project has created. . While work continues to that end, and further announcements about developmental milestones will be made in due course, the DAC is encouraging all with a vested interest in DA to review the evidence supporting Dare’s implementation at lmadare.com. and is urging all concerned to register their support for its implementation, to enable every stakeholder in the DA market to benefit from its powerful potential to drive growth, increase efficiencies and deliver cost savings.