Amlin chief calls for more transparency in penalising under-performing businesses
The chief executive of Lloyd's biggest managing agency has told Lloyd's that it must be more transparent in how it is penalising under-performing franchisees.
Amlin chief executive Charles Phillips delivered a mixed verdict in his assessment of whether the franchise board was meeting its objectives at a Lloyd's lecture last week (see box right).
He called on the franchise board to show how it was disciplining "dreadfully under-performing market businesses" which, he said, "pose one of the largest risks to the market's reputation and security rating".
Phillips remarks come as Lloyd's outlined its strategic plan to maintain competitiveness, including measures to make franchisees more aware of performance targets and penalties (see box below).
He said: "As a franchisee, I would welcome not only greater transparency as to how the market has performed against the Franchise Board's guidelines but also an understanding of what is being done about the failure by some not to manage their business in line with the guidelines."
The franchise board's attempt to improve service standards through process change was described as "tortuous and terribly slow".
Phillips said: "There have been some major disappointments.
"These include the failure, after four years and tens of millions of pounds of franchisees' money, to deliver the electronic data system Kinnect."
A Lloyd's spokesperson said: "Lloyd's has made huge progress over the past few years. We have outperformed most of our global competitors, despite exceptional hurricane seasons, but have always said that there is no room for complacency and there is more to do."
Lloyd's report card
Objective: Improved service standards.
Phillip's verdict: Slow progress; disappointing. Change in approach needed.
Objective: Dramatic improvement in profitability.
Verdict: Too early to tell. Improvements in Lloyd's ability to monitor.
Objective: Reduced costs.
Verdict: Not yet, but understandable given the changes the market is going through.
Objective: Improved security ratings.
Verdict: Done well. In the long term this is dependent in the improvement of profitability.
Objective: Culture change.
Verdict: Long-term objective. Lloyd's should be a role model for cultural change and show leadership.
Strategic plan sets out framework to reduce costs and improve clarity
Lloyd's has published its three-year strategic plan to reduce business costs and ensure the market's continued competitiveness.
The plan sets the framework for delivering five key benefits for businesses using Lloyd's.
These include: a clear and transparent performance framework, capital advantages, efficient business processes and cost-effective market access.
A Lloyd's spokeswoman said: "The plan's main themes are: treating businesses at Lloyd's more individually and based on their track record; working up a set of clear performance standards, so that all the franchisees are clear what standards they have to meet and what the penalties will be for falling short; and generally doing everything possible to reduce the cost of trading at Lloyd's."
She added: "We'll be working with the market to put the flesh on the bones over the coming months.
Lloyd's chairman Lord Levene said: "Lloyd's has made significant progress in recent years, but we operate in a fiercely competitive environment and cannot afford to stand still."