Lloyd’s today unveiled a wide-ranging and ambitious strategy as it called on stakeholders to seize a “once-in-a-generation” opportunity to address the market’s ingrained challenges.
The prospectus launched today provides further detail on CEO John Neal’s vision for Lloyd’s, high-level plans for which were published in a March interview by this publication.
The strategy rests on six pillars, which Lloyd’s said illustrate how the market can respond to challenges and transform the way it delivers value to its customers.
– A platform for complex risk that makes doing business easier and enables efficient digital placement of the most difficult-to-cover risks.
– The so-called Lloyd’s Risk Exchange, dedicated to the transaction of less complex risk at significantly lower cost.
– The ability for flexible capital to simply and effectively access a diverse set of insurance risks on the Lloyd’s platform.
– A “syndicate in a box” solution, which offers a streamlined route to market for entrants with new products or business.
– A “next-generation” claims service designed to improve customer experience and speed up claims payments.
– An ecosystem of services to aid market participants in customer service and the development of business.
Lloyd’s said it would start work on building and delivering prototypes and full solutions from October, with some operational in early 2020. Solutions that use off-the-shelf technology will be delivered earlier than those that require building from scratch, it noted.
The Corporation added it would start delivering “quick wins” as soon as it saw them.
In a detailed document outlining the strategy, Lloyd’s laid bare its cost challenges.
It noted acquisition and administration costs were high, and falling more slowly than those in other sectors.
“Insurance’s 30 percent or more cost of doing business does not compare favourably to the 4-13 percent cost of an equity IPO,” it said.
It also noted that the volume of binder and MGA business at Lloyd’s had grown from 33 percent in 2014 to nearly 40 percent of the total in 2018, bringing with it materially higher acquisition costs and marginally lower administration costs.
“Although the business mix has changed, Lloyd’s has not adapted quickly enough, meaning the costs of doing business are higher than they need to be,” the report stated.
The strategy document highlighted challenges around attracting talent and new capital, and pointed to protection gaps for both tangible and intangible assets.
Lloyd’s also stated its aim of building an “inclusive and innovative culture” at 1 Lime Street.
The Corporation is now calling on the market to give feedback on its strategy and will hold further forums later in the year.
Neal said in a statement: “We will succeed by harnessing the entrepreneurial and innovative spirit that is at the heart of Lloyd’s.
“Together, we have a tremendous opportunity to reimagine Lloyd’s and build a marketplace that is future-focused, highly responsive to the changing and diverse needs of our global customers, with a culture of inclusivity and innovation.”
Lloyd’s chairman Bruce Carnegie-Brown said: “Throughout its history Lloyd’s has always sought to reinvent itself by remaining at the forefront of insurance innovation.
“The proposals we have announced today represent the culmination of months of engagement with stakeholders across the market and around the world. I believe they will set Lloyd’s up for success for the years to come.”