In the ‘Lloyd’s Strategic Plan’ document issued recently by Lloyd’s, section 5 – ‘Operating Environment’ was the one I found the most interesting simply because it encompasses Scyllogis’ area of operation, namely the utilisation of technology to improve the efficiency and effectiveness of the insurance organisation. To put this into context, early in the document the following two issues were set out:

“Emerging markets and international and regional trading centres
In 1998, the GDP of the G7 countries represented 50% of world GDP but by 2008 this had fallen to 42%. If the current trend continues over the next five years this could reduce to 38%. It is clear that emerging markets present new opportunities for the insurance industry and challenges as to how best to access them”.

“Distribution
As local insurance markets develop and cost pressures drive brokers and insurers to seek more cost-effective distribution channels, complex commercial insurance business will increasingly tend to remain in local markets that are able to develop their underwriting capabilities. This, together with changes in brokers’ business models, for example through consolidation or the development of regional insurance hubs, could change the way in which business flows to the Lloyd’s market. In addition, changes to the Lloyd’s Act through the Legislative Reform Order (LRO) will enable non-Lloyd’s brokers to deal directly with managing agents if they so wish, making it necessary for requirements to be in place which ensure the same standards apply to all brokers placing business directly in the market. “

If these are true (and in my opinion they are), then the ever increasing remoteness of the business from Lime Street will continue to demand technology solutions and process change away from the assumption of face-to-face business.

Returning to Section 5, the sub heading was “an efficient, cost effective operating environment that allows managing agents and brokers, irrespective of their location, to deliver excellent service to customers”.  The features of such an operating environment were defined as:  Fast, expert service from quotation through to claims settlement; Brokers and other producers are able to deal easily with Lloyd’s underwriters, using simple, streamlined processes with costs comparable to other markets; Flexible operational support underpinning the range of distribution channels and easy access to Lloyd’s underwriting expertise and range of insurance products irrespective of location.

This, the document tells us will mean certain standards and tools, namely:  Operational and data standards that ensure the efficient conduct of business in the market; Centrally sponsored, value-added services and tools which support high quality, efficient transaction of business.

This will have implications for market practitioners. Any burden associated with the processes and operation of a broker subscription market will be minimised, strengthening the competitive position of all managing agents. Information will be sourced once and used many times to support managing agents in planning, measuring and managing their business. Managing agents (and brokers) may need to modify systems, processes and behaviours to benefit fully from the planned changes. The last point I suspect for some will be the hardest part.

So what are Lloyd’s service and cost priorities for the three years commencing in 2009 in order to realise this vision? The document sets out the following: “Ensure the ECF and A&S repositories are embedded in day-to-day market operations and deliver improvements as required. Simplify market trading relationships through the implementation of a pilot for the Lloyd’s Exchange and if successful roll out across the market and encourage take-up. Review the means by which Lloyd’s gathers information and ensure there is no duplication or redundancy. Simplify and design options for future information collection and offer to the market. Working with the market, review the central servicing model and by clearly splitting out Lloyd’s information reporting requirements, design and agree a new operating model that can be used on a worldwide basis.

Regarding standards and tools the priorities are: Ensure the correct ACORD governance framework is in place and drive forward the implementation of ACORD standards. Develop lloyds.com as the single market interface for Lloyd’s information, services and reporting. Implement a dual data centre environment for the Corporation to ensure a robust IT platform that supports services to the market. Complete implementation of a single ‘global IT network’ connecting remaining key international offices.