Lloyd’s of London has dropped ambitious plans to set up its own electronic exchanges and will work with other existing platforms to speed up the underwriting process and cut costs, the commercial insurance market said on Thursday.
Lloyd’s said last year that it planned to launch two electronic exchanges covering simple and complex insurance deals. In February it piloted an electronic exchange for simpler insurance transactions.
The 330-year-old market operates mainly with face-to-face trading and is up against competition from lower-cost rivals, although the COVID-19 pandemic has forced Lloyd’s participants to use more electronic trading and agree deals online.
Lloyd’s no longer plans to launch its own complex risk exchange but will work with existing platforms already used by the market, such as PPL, to improve digitalisation. Lloyd’s bought a 40% stake in PPL this year.
“We wanted to execute quickly,” CEO John Neal said, explaining the change of tack.
Lloyd’s also said it would develop an “exchange of exchanges” for simpler risks, connecting existing automated systems used by insurers and brokers, and would update the market on this next year.
The Lloyd’s market, which comprises more than 90 insurance syndicate members and hundreds of brokers, insures anything from ships to sculptures.
“We are redesigning the entire insurance life cycle, something which has not been attempted at Lloyd’s for a very long time,” Neal told an online launch event for the second report on its Future at Lloyd’s strategy.
“It’s going to take the whole market to support us if we are to succeed.”
Some market participants have resisted change, saying they were not convinced automation would work for the complicated risks insured by lloyd’s.
Neil said the COVID-19 lockdown has shown the market can operate when the floor is closed.
Lloyd’s plans to make other changes over the next two years to improve operational efficiency, such as automating claims processes to try to cut costs for insurers and brokers by about 3%, or 800 million pounds, annually.
Christopher Croft, CEO of broker trade body LIIBA, said London companies that operate outside Lloyd’s should be included in the digitalisation plans.
“Lloyd’s developing services just for its own use would be a backward, not forward, step,” he said in a statement.
Neal said Lloyd’s plans would benefit the entire London market.