Lloyd’s is considering radical change in the way that some of the market underwrites, with greater use of artificial intelligence (AI) and algorithms, according to the updated version of its vision for the future market: Blueprint Two: sharing risk for a braver world.
According to a section of the 104-page document on automated placement, Lloyd’s claims that the use of AI and algorithms to automatically underwrite business is evolving rapidly and its use is increasing, with several innovative Lloyd’s syndicates already offering algorithmically underwritten products to retail brokers and wholesalers.
“There is a significant opportunity for Lloyd’s to support this placing method by providing connectivity from multiple markets to multiple retail brokers and wholesalers through an exchange of exchanges capability,” the report says.
“This will form the basis of consultation, research and experiments over the next year to determine the right way to support this placement method in Lloyd’s, building on the work done and infrastructure implemented for open market and delegated authority business described above.”
Lloyd’s expects to update the market further on its proposals regarding automated placement in 2021.
The second blueprint sets out the delivery plan for the next phase of the market’s strategy to build the most advanced insurance marketplace in the world, outlining a two-year programme that brings to life the ambitions published in Blueprint One which was launched 14 months ago.
In total Lloyd’s expects the market can achieve an ambitious £800mn in cost savings by implementing the plan which it hopes to execute within a two-year timeframe.
Speaking at the launch, Lloyd’s Chairman Bruce Carnegie Brown (pic) said the pandemic has only hastened the need for the market to act.
“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,” he 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. Blueprint Two is our roadmap to get there and I’m confident that together we can make it happen.”
Lloyd’s said the comprehensive programme and priorities detailed in Blueprint Two “will profoundly transform the way in which customers get covered, right though to recovering from loss; this will be achieved by the redesign of the entire insurance lifecycle process – from placement through to accounting, payment, endorsements, claims, renewals and reporting – offering a seamless digital service for all Lloyd’s customers and stakeholders globally”.
Blueprint Two sets out the market’s aims to achieve:
- Approved and clear data standards that will support the next generation of placement platforms and solutions at Lloyd’s.
- A new Lloyd’s marketplace gateway and super-fast processing capability that will allow cover to be evidenced and issued in minutes and simultaneously create technical accounting records.
- Automated claims recognition, routing and orchestration that will facilitate faster claims payments.
The latest step by Lloyd’s has been welcomed by the London Market. Speaking to Emerging Risks, International Underwriting Association CEO Dave Matcham explained that “Lloyd’s developing services just for its own use would be a backward not forward step”.
“Most business in London is placed across both Lloyd’s and company markets so a single set of processes for both is vital. It is called Future at Lloyd’s but unless it is Future at London, we will have failed,” he added.
The launch was also welcomed by Christopher Croft, CEO of broker representative body LIIBA.
“This is an ambitious set of proposals that could deliver a significant reduction in the cost base of London carriers – the single largest contributor to the cost of doing business here. From a broking perspective, this can only reinforce why risks should come to London,” he said. “But for us to be the market we all aspire to, we must ensure the enthusiastic engagement of all sectors of the market, and especially the company market.”
However, he warned unless the market opened up access to the technology to the wider London market the scheme was likely to fail.
- An intuitive, straight-through process for placing and binding risk: enabling growth through global reach and easier access to new products and services
- The ability to identify a valid claim on notification: enabling claims to be tracked throughout their lifecycle, resulting in a much faster settlement time and improved customer experience
- A right first-time mentality: radically reducing lead-times and errors, driving cost benefits for everybody in the value chain
- A first class, digital marketplace: data-driven and digitally enabled; this is how we’ll create the most advanced insurance marketplace in the world