The Corporation of Lloyd’s today announced a mandate for electronic placement following approval from the Lloyd’s Board and Council.
The mandate has been developed following detailed discussions with members of the Lloyd’s market, the Lloyd’s Market Association (LMA), the London & International Insurance Brokers' Association (LIIBA) and the International Underwriting Association (IUA).
From the end of Q2 this year, each syndicate will be required to have written no less than 10% of its risks electronically. This target will rise by 10% each quarter until Q4 2018 (to 30%). Further targets will be confirmed prior to the end of Q4 2018.
The mandate is designed to accelerate the market’s transformation from paper to digital and ensure the market realises the benefits of electronic placement.
By way of financial incentive, if managing agents meet with each of the target requirements then members of that syndicate will be eligible to receive a rebate on their annual subscriptions. If managing agents have not met with each of the target requirements then members of that syndicate will pay additional fees, in order to contribute to the costs of modernising market systems and processes and may be subject to capital loading.*
Lloyd’s Chief Executive Officer, Inga Beale, said: “We must ensure that Lloyd’s and the London market moves together and continues to prioritise its modernisation efforts. We have agreed the scope and requirements for the electronic placement mandate. Those that adopt electronic placement in line with the mandate will receive incentives, in recognition of their increased efficiency. Those that fall short will be required to contribute towards the costs of modernising the market. We have a system that works and that supports face-to-face negotiations. Adoption by the market will increase efficiency, reduce back office costs, and most importantly improve customer service.”
Lloyd’s Market Association Chief Executive, David Gittings, said: “The LMA Board supports the introduction of a mandate to encourage electronic placement across the London market, and it is pleased that the recommendations it made earlier in the year to encourage adoption are being taken forward.”
London & International Insurance Brokers' Association Chief Executive, Chris Croft, said: “The LIIBA Board welcomes the proposal made by Lloyd’s to mandate use of an electronic trading platform. We have supported its adoption since PPL was first initiated and there is clear evidence that the platform now provides a sound basis for the placement of London market risks. Already 29 brokers are on the platform, and in the last three weeks we have held meetings with another 20 of our members to encourage them to sign up and get involved. We will continue to work with our members and insurance partners to drive further adoption.”
Chief Executive of the International Underwriting Association, Dave Matcham, said: “PPL can only be successful if it is widely used across the London market and supported by enhanced capture of data in a structured manner. Growing volumes and take-up for the system across multiple business lines is an urgent priority for 2018.
“The mandating of electronic placement by Lloyd’s will undoubtedly provide a significant boost for these objectives. The IUA supports this initiative and will continue to actively promote and engage members in paperless electronic trading. Many IUA members have already demonstrated clear support for PPL and I strongly expect this to accelerate further in the coming months.”
The electronic placing platform provided by PPL was launched in July 2016, initially for standalone Terrorism business. Today, 36 lines of business are available on the platform, with 29 brokers and 93 carriers signed up. Accident & Health goes live in April and the PPL Board is working with the market on agreeing suitable live dates for the remaining classes of business including Reinsurance and Aviation.
Notes to Editors
* Details of the rebate and additional fee calculations are included in the mandate.
If managing agents do not achieve at least 50% of the target requirements then they will be asked to prepare a remediation plan setting out how it will meet these during 2019. Lloyd’s reserves the right to increase the properly derived Economic Capital Assessment (ECA) for that syndicate by 5% at the next “coming into line” date for that syndicate if the remediation plan is not complied with.