Insurance marketplace Lloyd’s of London said Thursday that it plans to reduce operating costs for brokers, underwriters and its business partners by GBP 800 million ($1 billion), or around 3% of the total, over the next two years by embracing technology to increase automation and reduce bureaucracy.
Lloyd’s “Blueprint Two,” which outlines the next phase of Lloyd’s strategy to “build the most advanced insurance marketplace in the world,” is a follow-up to revamp plans laid out last year. Since “Blueprint One,” Lloyd’s said it has cut costs for its clients by reducing the need for reentering data with its new placement APIs, streamlining the claims process and finalizing its 40% stake in the London market’s electronic placing platform PPL, among other efforts.
Lloyd’s said the new two-year program will “redesign [the] entire insurance life cycle process” from placement to accounting, payment, claims and reporting.
“The plans we set out in Blueprint Two will deliver truly revolutionary change for the market, ensuring the future of the Lloyd’s market is digital from start to finish, with data at its core,” Lloyd’s Chief Operating Officer Jen Rigby said. “We’re now bringing to life the thinking in Blueprint One by practically showing how our future digital ecosystem will improve risk placement in the market and help customers recover from loss.”
It sets out to achieve clear data and processing standards to support the “next generation” of placement platforms at Lloyd’s, it said, as well as automated claims recognition and routing for faster claims payments. The marketplace also plans to have a new “marketplace gateway” and quick processing capability for implementing faster issuance of cover and simultaneous creation of technical accounting records.
For open-market placements, which use third-party placing platforms, Lloyd’s said there will be a new PPL platform in the next two years. Lloyd’s said it will not develop its own placement platform but instead provide risk placement standards. As for delegated authority placements, the marketplace said this area will be supported by a “Lloyd’s owned platform.”
As for treaty insurance and automated placements, Lloyd’s said it will update the market in 2021 on how it will be able to support them.
With a more efficient system for market participants, Lloyd’s believes it can help with direct cost savings, as well as help market participants to spend less time on “non-value-add” administrative tasks and focus more on “value-add” activities like developing new products and services to cater to customers’ needs, the firm said.
Lloyd’s increased focus on digitalization comes as it explored a “virtual” underwriting room due to COVID-19-induced lockdown measures. Most recently, with the second U.K. lockdown that started Thursday, Lloyd’s announced this week that its physical underwriting location will only be open once a week.
“The pandemic has demonstrated that Lloyd’s can adapt in a fast-changing environment and this has only increased our hunger to get on and make further change happen,” Lloyd’s Chairman Bruce Carnegie-Brown said. “As a market, we have the appetite and energy to execute on our plans for the future and in doing so, we have the makings of real, transformational change.”