RI3K founder goes on offensive over Lloyd’s processes
Lloyd's "plumbing" system of outdated, paper-based processes is so unwieldy and inefficient and weighed down with the "sewage" of so many unsigned wording, delays and errors that its "customers can't bear the stink", according to Alex Letts CEO of online reinsurance trading company RI3K
"From a marketing viewpoint, Lloyd's potentially has it all. But it has rubbish plumbing. In fact the drains round here are so bad that customers can't bear the stink. Even some of your long-term residents are moving out or preparing alternative accommodation. Rotting sewage, in the form of ancient processing, is backing up in open drains, and has got to go," said Letts.
Letts was giving a lecture entitled "2006: The Last Hurrah for the Subscription Market?" to the Insurance Institute of London in the Old Library at Lloyd's on 25 January.
Dissecting Lloyd's from a marketing perspective Letts highlighted problems that will be familiar to those at the Society. Diminishing market share in the face of competition from Bermuda, where the market has successfully raised 10 times the capital of London in the last 12 months.
Significant price differentials in business acquisition costs and combined expenses added to the poor service standards offered under Lloyd's crumbling paper-based systems are combining to form what marketing professionals would term a "Perfect Storm", according to Letts.
"Here you have an ageing market, whose basic offering is old. It is more expensive than its nearest competitor," commented Letts. "Its product differentiation is seen to be tenuous, its people no better, and its service simply worse. With this set of attributes, any marketer would tell you that maintaining market share is impossible."
On the positive side Letts acknowledged the strength of Lloyd's brand, underpinned by its worldwide licences, its concentration of capital and resources and the physical presence of the subscription market itself.
"But…. no brand lasts for ever. Over a period time they grow, flourish, lose their relevance and die. That period can be weeks, months, years, generations, or even longer, but as night follows day, all brands die. Always," warned Letts, as he cited examples as diverse as Triumph cars, Golden Wonder crisps, the USSR and the great trade guilds that used to hold financial power in the City of London.
Letts set out the challenge for Lloyd's of maintaining the brands relevance or joining this list of famous but deceased brand names.
"The brand may not find it quite so easy going in justifying a premium price but if it has a decent product and works hard to stay relevant, it can survive," added Letts. "Equally, of course, it can lose relevance, fall off the cliff and it's 'sayonara'."
Key to maintaining the Lloyd's brand relevance is modernising the "plumbing" that is holding it back, with modern systems that enable contract certainty to be achieved and service levels to be drastically improved.
"With a powerhouse brand, a unique, contract certain, physical market you have a solid proposition. Add in the service gains of a supportive electronic marketplace which records and speeds data cheaply and quickly all in the blink of an eye, and London would be really relevant. As I say, it is as an opportunity, not a threat," concluded Letts.