Once-in-a-generation change is under way at Lloyd’s. The market is charting a transformation that will return us to the front of the international insurance flotilla. It is a real opportunity to reinvent our market, and lead the world into the future.
The need for change is incontrovertible. Disruptive technology is leaping ahead of Lloyd’s entrenched processes. Alternative capital is making its mark, but finds Lloyd’s difficult to enter. Our products cover only about half of clients’ risk managers’ top risks, we are not cost-competitive, and we are short of talent for the future. We must act now to make our 300-year-old institution fit and competitive for the next three centuries.
For the past four months, the LMA Board has been closely involved in defining Lloyd’s purpose, creating a new Lloyd’s value proposition, and outlining the market’s future strategy. The result, The Future at Lloyd’s (futureat.lloyds.com/prospectus/home/), is part of a genuinely collaborative process, not a directive pushed outwards from the centre.
Together we identified various possibilities that are before you now, but they are not set in stone. We want your input. Everyone is likely to support some proposals strongly, suggest or endorse modifications to others, and probably find some disagreeable, but we must and will reach consensus. Our future depends on it.
Six new ‘transformational initiatives’ are outlined in The Future at Lloyd’s:
- evolve our platform for underwriting complex risks
- create a low-cost risk exchange for straightforward risks
- devise a simple, effective structure for capital of all kinds to back Lloyd’s
- implement an automated, next-generation claims service
- construct a simplified process to launch new syndicates and products
- develop a resource ecosystem to support innovation and service.
These initiatives will have to be underpinned by a new, alternative lead-follow model, something the LMA Board has worked closely with Lloyd’s to map out.
Lloyd’s says some of the initiatives could be operational as early as 2020, so there is no time to waste. That said, the LMA will be focussed on ensuring that any initiative implemented is thought-through, tested, and workable before it goes live.
The market entered a ten-week consultation that presented the opportunity for practitioners to help shape the market’s future via an online survey and Lloyd’s forums. If you have any questions or would like to provide further feedback, contact the LMA expert looking after your specific area of interest for an informal conversation.
The LMA will continue to gather your views informally, and to explore them formally through our many market committees.
Feeding back through the LMA has some advantages. First, Members may not wish to make some of their observations directly to Lloyd’s. The LMA provides a channel of anonymity. More importantly, you will help to form the LMA’s collective view, which ultimately I will present to Lloyd’s on behalf of all members. We will also deliver an LMA response to the online survey. Of course, you may want to convey your views directly to Lloyd’s as well.
The LMA will continue to work tirelessly with the market and with Lloyd’s to reach an agreed vision for our future. Together we have advanced six transformational propositions to make Lloyd’s lean and efficient, even more innovative, easy to work with, and hyper-responsive to customer needs and emerging risk issues. It is now time to fill in the detail – and I am under no illusion that the process will be simple. Some of the proposals will fly, but others may not.
I am equally confident that we will get there in the end, and I am determined that by working together we will get it right. That makes it all the more essential that we hear your opinions about the biggest changes at Lloyd’s since R&R in the 1990s. Synthesizing opinion to reach consensus is a key part of the LMA’s role in this process. It is a rare opportunity for the LMA to enable the success of our members and the market. Let’s work together to define how change should look.
Published 23 July 2019
This article was previously published in the 2019 Spring/Summer edition of Viewpoint
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