Insight and Intelligence on the London & International Insurance Markets 19 Feb 2018
A time for execution
- 6 February 2018
On a wall of the Insider offices is a framed piece of original artwork that was published on the front cover of the fourth issue of the then London Insurance Insider.
It depicts a frightened crowd of ageing pinstriped market professionals and Names surrounding the Lloyd's building. They are gazing up hopefully at Richard Rogers' dazzling architectural confection as if it were an alien space ship that had just touched down on Lime Street.
The caption below the image reads: A time for vision.
When that cover was commissioned the Lloyd's platform was on fire as the high-stakes drama of Reconstruction and Renewal (R&R) raged.
Today the platform is not quite ablaze, just smouldering.
The global industry has a serious expense problem and, as one would expect from the world's ultimate wholesalers, Lloyd's and the London market have it slightly worse than everyone else.
Since 1996's R&R there have only been a few key leadership moments requiring similar vision. As often happens, they all came almost at once.
One was the response to the calamitous underwriting of the late 1990s with the formation of the Lloyd's Franchise Board.
Another was the merger of London's duplicating (previously triplicating) back offices, the outsourcing of their administration to Xchanging and the formation of the Market Reform Group to unite Lloyd's and the company market in addressing common challenges.
A third was Lloyd's decision to press ahead with the Kinnect electronic placing system.
The first two out of the three were great successes, proving that despite conservative appearances, London is quite capable of difficult structural reform.
But the third was a disaster, for which Lloyd's CEO Nick Prettejohn bore ultimate responsibility.
Since then the immobilising shadow of Kinnect has been cast long and dark over successive Lloyd's CEOs.
This was true until the London Matters report in 2014, when the seeds of today's Target Operating Model process were sown, appropriately through the auspices of a later iteration of the Market Reform Group.
Confidence has steadily built from there, culminating in yesterday's announcement from Lloyd's that it is considering a phased mandating of the use of the Placing Platform Limited (PPL) electronic placing system.
The move is significant because however you dress it up, for the first time in 15 years a Lloyd's CEO has personally endorsed the goal of 100 percent electronic trading.
Yes, the move may have been skilfully orchestrated behind the scenes with the other trade bodies, and Lloyd's is the only member of the quartet of entities that make up the London Market Group that has the power to mandate anything, but make no mistake, Inga Beale has been brave.
Her tenure is now inextricably linked to the success or failure of PPL.
Kinnect failed because the brokers didn't want it. Brokers are the first point in the chain and therefore the key to success in any reform programme.
This time around the London & International Insurance Brokers' Association is being hugely proactive and intermediaries representing the lion's share of business placed in London are now behind the change.
The brokers are the business flow and everyone else will come into line if they want to continue to write deals.
When I started broking I didn't have a computer on my desk and we had a typing pool.
A year later a green-screen machine arrived and I had to type up my own slips.
I moaned a lot, especially since I also had to enter all my unsuccessful quotes on it.
But a year later I was reaping the benefit of being able to prepare my renewals in the blink of an eye. I wouldn't have gone back to the correction fluid and sticky tape of my early career if you paid me.
It's time for the market to be forced to make the same step-change I had to deal with 25 years ago.
Lloyd's is to be applauded for backing a vision of frictionless global trading.
But the time for vision has now passed and a time for execution is upon us.
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