Richard Ward has started to get tough with those he believes are holding back reform of the market
?When it comes to saying the right things, Richard Ward has become well versed in the scriptures of Lloyd’s. In his maiden speech, just six months into his tenure, he pleased the market faithful with promises to “fix the fundamentals”, ensure that Lloyd’s is “the marketplace of choice” and “deliver efficient business processes”.
As one Lloyd’s underwriter puts it: “He says all the right things. He is very, very eloquent.”
But, while previous speeches have appeared light and fluffy, deviating to no great degree from the party line, his public address last week (News, 24 May) has seemingly drawn out a different side of the chief executive.
The tone was more aggressive; the message too, very clear. As he embarks on his second year in charge at Lloyd’s it is that kind of proactive leadership and strong intent that the market is desperately looking for.
“The bigger agencies are all keen for action,” says one senior Lloyd’s source. “And, these are tougher words, threats, but all good thoughts.”
But another adds: “We are at the point where change is inevitable and so we may as well embrace it. [Ward] has been brought in to Lloyd’s as the man who will change the infrastructure and take forward the use of technology, so I guess he has no choice but to champion the cause.”
It has long been established that in order to bring down the expense of operating at Lloyd’s the need to drive back-end process reform is crucial.
It is that reform where Ward’s attentions now appear to be firmly directed and he seems intent on making sure the market buys into it too.
Ward is clear, in order to reap the benefits of change there are a number of things that need to change in the London market. These include providing contractual documentation to customers within 30 days, speeding up the resolution of claims and removing paper from the transaction process.
He pulls no punches when he says: “We’re not efficient, our customers are expecting more, and we are faced with more competition. It is extraordinary how industry leaders who spend their day spotting and taking advantage of business opportunities and developing innovative insurance solutions seem to be unable to grasp the importance of improving the level of service to their customers.
“In my mind it’s simple. Businesses which don’t recognise this will be left behind.”
In a bid to achieve this long-overdue reform, Lloyd’s introduced an electronic filing cabinet – a document repository that enables claims and premiums to be handled quickly and efficiently without the need for paper files.
In addition, more than 80,000 premium-related transactions have also been processed electronically.
But while take-up has been encouraging, according to Ward, it “could be a lot better”.
“We’re not efficient, our customers are expecting more, and we are faced with more competition
While his priorities are not necessarily new, how he intends to push take-up forward certainly is. Ward has promised to “look at the levers that we can pull to increase uptake of ECF (electronic claims files)”.
If progress is not made, he has threatened to publish league tables of the market’s performance, mandate the use of electronic claims files and load syndicates’ capital requirements.
For the first time he has gone beyond delivering a wish list and has laid out measures to ensure that if the market doesn’t respond Lloyd’s will take the initiative, something that has long been called for.
“Mandating is a good thing for the laggards, but we do need 12 months’ notice,” insists one broker. “You can’t have people scrambling to implement systems [in support of ECF].”
Similar caution has been targeted at Ward’s suggestion that London brokers should think about removing themselves from the “money game”, where brokers hold monies due to underwriters, in a bid to tackle the issue of trapped premiums.
“He says that he is being radical by suggesting that brokers should remove themselves from the money chain. This isn’t anything new though and Lloyd’s has had opportunities to tackle brokers on the subject before.
“But, it is an issue that has always been put in the ‘too difficult’ box as earnings from held funds have historically been crucial to the financial stability of many brokers and they haven’t wanted to give them up.
“It will be interesting to see where Ward gets to on this,” says the broker.
In fact, the question is whether this is all a tangible change in tactic for Ward, or simply an effective piece of speech writing.
“There is absolutely no question that this is not talk,” insists Alex Letts, chief executive of RI3K. “An action plan is being driven through right now.”
Sue Langley, chairman of the group of six leading insurers at Lloyd’s (G6), firmly agrees. “The priorities are absolutely practical. The great thing is, they are focused. There’s not a huge list but just two or three priorities.”
Previously, some have questioned whether the undoubted improvements in business process reform have been as a result of Ward’s clear management, or simply the rewards of work already in progress.
While there can be no doubt that the chief executive arrived during a productive spell, indications are, one month into his second term, that Ward is willing to take responsibility and drive forward the insurance market’s ambitions to improve efficiencies and ultimately ensure that Lloyd’s is a competitive and profitable market.
Ward's wish list
• Contract documentation needs to be received earlier by customers. At least within 30 days
• Claims need to be turned around more quickly. Some users of the electronic claims files (ECF) are already reporting a 40% reduction in the time it takes to process a claim
• The flow of cash needs to speed up through the use of the accounting and settlement repository
• Business needs to be placed electronically – in a parallel rather than a serial fashion
• Paper needs to be removed from the process so that there is no longer the necessity for a fixed location.