Following the publication of Blueprint One, r10 carried out an independent survey across the Market, meeting with Brokers, Carriers, Vendors and the Associations to understand their views of the proposals and the potential impact on their business as well as the London Market. Meetings also took place with key Market stakeholders and throughout these conversations a number of common themes emerged which are summarised below;
1. There is a lack of appetite for large complex change programmes
The announcement of The Future at Lloyd’s initiative as the LM TOM programme was being wound down was not met with great enthusiasm. There was a strong desire to ensure that future projects were tightly scoped, compartmentalised, had true market representation and were value for money. Brokers, in particular, did not necessarily welcome an LM TOM MK2 and certainly one that has the potential of making London a more difficult place to do business. Clear propositions are asked for now, not in several months’ time.
2. Concerns over the scale of ambition and lack of detail
At 146 pages long Blueprint One is both too long and too short. It was too long for most to consume and too short to contain meaningful detail as to how the proposals would be delivered. Most required much more detail so they could make informed investment and planning decisions but felt unequipped to do so. It is hoped the update due on 26th February will provide clarity.
3. The need for broader consultation
Few companies felt there had been any meaningful participation in the consultation process leading up to publication of Blueprint One. Where those conversations did occur, it often didn’t involve those with first-hand knowledge of the operational intricacies of the market and it was felt that this was a missed opportunity. Many of the small to medium-sized brokers felt disconnected from the process, expressing genuine concerns over future investment and change fatigue from LM TOM.
Whilst it is understood that Lloyd’s has every right to set out and pursue its own vision of the future, it was felt that broader consultation at all levels, particularly across Market Associations and Technology Vendors (enablers) will be key to its success. It is apparent this has started to happen more recently, but not nearly enough.
4. Standards and interoperability are key
Many Brokers have a need to access global markets alongside the London Market and have a strong desire for a universal trading platform for use in all territories and markets they place business into. Such a platform would be hugely beneficial to all parties and should ultimately support downstream activities such as Accounting and Settlement.
Some voiced concern that Lloyd’s appeared to be building a “technical moat” around their marketplace, with their own standards & API’s, rather than following industry-accepted ACORD messaging standards. If this is correct, then the increased operational and technology costs will negatively differentiate Lloyd’s and are likely to impact flow to the market.
5. Lack of clarity on what “Data First” trading will involve
It was generally acknowledged that data and analytics will play an increasingly important part of the placement proposition and there is a need to improve the flow of data amongst parties (assuming it is available and can be provided). Not all brokers were clear on the benefits of moving to a data-first platform, or even what that meant in practice. Given the likely impact on skills and capability such a platform would have, brokers were seeking clarity on the proposals.
6. Legacy claims not addressed
There was strong support to improve the claims propositions, although most would prefer to see a joined-up initiative across the entire London market. Several stated that significant improvements could be achieved with minor changes to the current processes, before major capital investment was necessary. The leading concern, however, was about the lack of proposals for handling of the run-off of existing claims. Without a clear migration path to the new processes, there will be a long-term need for dual running of legacy platforms, increasing complexity and cost.
7. Accounting & Settlement
With changes to Accounting & Settlement (CSRP) featuring highly in the previous LM TOM programme, Blueprint One offers very little detail of the proposed changes. Given every risk placed in our market generally has a premium and often a claim, it is a concern that so little of the Blueprint is dedicated to this this crucial operational function. Changes to the existing infrastructure will need to be carefully considered and the impact on Brokers and Carrier properly understood.
Next Steps
Despite the concerns outlined above, there is strong support for market modernisation although some were taking a wait and see approach. All parties are chasing efficiencies, reduce costs and improvements, but not only for the London Market (think global).
It is hoped that the update to Blueprint One due on 26th February will bring greater focus and clarity on deliverables and lead into a wider dialogue on delivering the proposition.
r10 Community Workshops
r10 found views from the Market vary enormously depending upon each company, type and class of business. There was little reference to the client and again there was difference of opinion as to who is the end client. r10 will be hosting community workshops for market practitioners to discuss the evolution of the Blueprint and how the proposals may impact placing and accounting business in the London Market.
If you wish to register your intent to attend then please get in touch with us.