Lloyd’s CEO John Neal has made clear that once the Corporation has finalised its technology solutions on market interconnectivity all participants will be expected to use them.
Following the publication of Lloyd’s prospectus for the market, the executive told The Insurance Insider that once the Corporation had settled on the system for market participants to access and use Lloyd’s, there would be no option to use alternative methods.
As part of its strategy, Lloyd’s plans to allow greater and faster access via the use of technology, and envisages the creation of two platforms, for commoditised and complex risk respectively. The Corporation will undergo a lengthy and extensive consultation on its strategy before the final blueprint is pinned down in late September.
“We have to develop tech that connects in and out of systems,” Neal told this publication. “We will work out how [this technology] can connect effectively into broker system A and carrier system B, but once we get to a solution to do that inside the market, that is the only solution.”
He added: “If you create optionality you create risk of failure.”
Neal stressed that the market would be consulted regularly throughout the building phase of the tech systems and would not just be presented with a fait accompli.
There will be no formal mandate to use Lloyd’s in-market technology, as was the case with PPL, but a mandate would arise by default as it would be the only way to operate in Lloyd’s, Neal said.
He continued: “I think the overall value for the market then is that we will have a much bigger marketplace with much more opportunity, and the costs of being part of Lloyd’s will be less. That will be the carrot.”
“The stick is, ‘this is how we do things around here’.”
The Lloyd’s prospectus is based around six ideas, one of which is “syndicate in a box”, a fast-track entry to market.
This can easily be delivered during the course of 2019, Neal said.
Other priorities out of the six would be developing the two risk platforms and working out how capital can easily access them, as well as how to pay claims more efficiently.
As part of this, work on how a greater distinction between leaders and followers would work has already been started by the Lloyd’s Market Association, with the Lloyd’s performance management directorate feeding into it.
The Lloyd’s “ecosystem” – a network of research, insight and market data – would take longer to implement, the CEO said. However, Neal noted that by 2023 the market should be seeing the value from it.
During an earlier market presentation, Neal said Lloyd’s would build out its innovation lab both as a hub for data and information, and as an incubator for new product development.
Neal acknowledged the success of his ambitious strategy would be determined by market willingness and support.
“Therefore, it is all timing,” he said. “If you sit in a room with experienced people and you come up with solutions together, you know you can do it – it’s just whether people are going to get behind it and say it is right, and that defines success or failure.
“It is all down to timing and my sense is the timing is right.”
Neal added that his approach of actively consulting the market in the run-up to the publication of the prospectus meant he felt Lloyd’s was on the right track and could start work on implementation early.
During a panel discussion at the earlier market presentation, Ascot CEO Andrew Brooks said the market “cannot afford to kick the can down the road any longer”.
The time to act is now, the executive said, noting that the market shows itself at its best when it works together.
“There is no doubt Lloyd’s is best when it comes together as a single market to drive change,” he said, pointing to the Reconstruction and Renewal process of the 1990s.
“This is an opportunity for the market to come together again. We cannot afford to fail.”