Lloyd's new insurance risk exchange will be piloted in 2020, with one board member describing market electronic risk placing as having reached a level of "critical mass"
Coronavirus has led to Lloyd's temporarily shutting its world-famous trading floor (Credit: Lloyd's)
The Lloyd’s of London insurance market will trial its electronic risk platform this year, a key component of the “complex risk platform” designed within its Blueprint One innovation plan, also referred to as The Future at Lloyd’s.
According to the announcement, the Corporation of Lloyd’s — the company that overseas the marketplace — will take a 40% stake in the new electronic placing platform (PPL).
A key priority for the organisation, the risk exchange is part of “Phase 1” of its plan to make Lloyd’s “the world’s most advanced insurance marketplace”.
The marketplace borrowed £300m ($386m) to fund the implementation of this first phase in December 2019, and said it’s ready to roll-out the changes from March 2020.
Lloyd’s chief operating officer and executive sponsor of the Future at Lloyd’s Jennifer Rigby said: “During transition we have been incredibly busy setting up the programme of activities, mobilising workstreams and securing the finances to deliver on our vision.
“I am delighted to reaffirm our commitment to building on the investments already made by the market, together with maintaining the ambition we set out with to create the world’s most advanced insurance marketplace.”
Lloyd’s CEO John Neal last year gave an audience at an industry event insight into the objectives and wider ambitions of the Blueprint One plan.
Now, commenting on the rolling out of Phase 1, he said: “I am thrilled with the progress we have made during transition.
“We are now ready to start building the Future at Lloyd’s, having achieved three major objectives — securing finance, setting the governance structure and detailing the plan for the next 12 months and beyond.
“I am excited about the opportunities The Future at Lloyd’s offers to our market, and grateful for its support as we move the ideas from strategy into reality.”
How will the placing of insurance risk change in the Lloyd’s market?
The Lloyd’s insurance market has been pushing members to place their risk electronically by incentivising them with rebates on their annual subscription cost.
It set cumulative targets that built the total amount of risk placed on electronic platforms up from 45% in the first quarter to 70% in the final quarter of 2019.
But while the market currently uses a range of technology platforms to place risk — the exchange planned within Blueprint One will bring all transactions onto one homogeneous programme.
Bronek Masojada, PPL Board Chair, CEO of Hiscox, and member of the Future at Lloyd’s Global Advisory Committee, added: “The investment by Lloyd’s is a tangible demonstration of their commitment to building on the success that PPL has achieved so far.
“With over 70% of risks now being bound electronically we clearly have critical mass and this investment will be used to enhance and industrialise the platform we have today, as well as building the next generation of PPL.”