Higher than expected number of bids to launch syndicates, Lloyd’s chief said

Lloyd’s chief executive has revealed the market is set to roll out four new firms that will launch ’syndicate in a box’ entities in the coming weeks.

John Neal was speaking as the market launched an update on its priorities for 2020 under its Blueprint for the Future plans.

“We have had applications to launch syndicates under the scheme from virtual insurers, through to MGAs who are keen to convert to standalone underwriters,” explained Neal.

“The new round of syndicates will reflect the smaller companies that are keen to access the benefits and strength of the market,” Neal added.

He revealed the market had been surprised by the number of companies that had applied to launch the new syndicates and added that it had a dozen that fitted with the set criteria.

“We have had a number of applications but we have ten to 12 that fit the criteria we have set out,” he explained. “Of that number we have four that are likely to go through quickly.

“From the outset we said that if the applications met the criteria we could provide approval in 90 days. We were pleasantly surprised by the number of applications we have received and there are four that we envisage will gain approval in the short term.”

Lloyd’s also announced it has acquired a 40% stake in the PPL initiative, designed to deliver electronic placing systems in the London market.

The Blueprint One: Update includes confirmation of Lloyd’s 2020 priorities as well as detailed plans for Phase 1 of the Future at Lloyd’s, which begins in March.

Transition phase

In a statement it said: “Recognising the complexities of delivering its ambitious programme, Lloyd’s has spent the transition period working with stakeholders to prioritise and plan the workstreams that create the foundations for The Future at Lloyd’s, whilst in parallel delivering early value to the market.

”The transition phase has now completed with the programme set on a firm footing to move into the first phase of delivery. Lloyd’s has also secured the funding for Phase 1 of the programme during transition, as well as setting up the governance structure and establishing the delivery teams.”

”At the time we announced the exchange within the blueprint the wholesale brokers feared it was the death knell and we were looking to steal their lunch which was never the intention”

John Neal

One of the key priorities will be to deliver in the plans for its standard risk exchange and Neal said the plans for the exchange had been one of the biggest sticking points for the broking community.

“At the time we announced the exchange within the blueprint the wholesale brokers feared it was the death knell and we were looking to steal their lunch which was never the intention.

“I think the risk exchange has been the biggest swing in perception. I can’t say we have won them over but we have been able to communicate what we are looking to do.”

He said the plan for the risk exchange was to enable brokers and underwriters to access the platform using their own technology.

“The aim is to allow access at both ends, so brokers can access the platform and coverholders and underwriters can place products on the platform.”

He added that firms that do not have the systems to access the platform will be offered access via Lloyd’s systems.

“In time we want to create a point of access to all,” said Neal. “If we can allow firms to access using their own technology it will be game-changing.

“If we get it right it will be a big win for the wholesale brokers and for the bigger brokers it will offer simplicity.”

Lloyd’s said it is to prioritise three foundational initiatives in 2020 that will create the essential infrastructure and lay the groundwork for the Future at Lloyd’s ecosystem. These are data and technology architecture, lead/follow (modern syndication of risk), and middle and back office transformation.

In parallel to the 2020 priorities, Lloyd’s said it will continue to progress the ideas laid out in Blueprint One for delivery in 2021. These include a prototype of the “data-first” version of the complex risk platform, new capital investment opportunities, including through the syndicate-in-a-box framework, and a commitment to ongoing cultural change.

Commenting, Chris Croft, chief executive of trade body LIIBA welcomed ”the ‘fundamentals first’ approach that Lloyd’s is taking with Blueprint 1A, and a focus on the bread-and-butter basics of business in the market.

”But there is an absolutely foundational area where we worry not enough attention is being paid: the accounting and settlement process.

”Undoubtedly it lacks the glamour, but resolving the complexity that currently surrounds it is vital.

”Brokers are still asked to do too much on behalf of insurers– significantly more than in any other insurance centre – very little of which is visible.

”Future at Lloyd’s has the opportunity to revive spirits in this area and reap considerable reward both in terms of benefit delivery and reputation for all participants.”