London market modernisation: what is the role of and the opportunities for brokers? With Chris Croft, LIIBA CEO

The London market remains the world’s leading centre for speciality risk. The pledge that it is the home for risks that cannot be placed elsewhere still stands. However, it faces competition from regional centres keen to retain a greater share of their local risks.

The current ambitious plans to modernise the market were put into ever sharper focus by the move to remote working during the COVID-19 pandemic, and the benefits that modernisation and digitalisation will deliver are clear. The reduction of frictional costs and the increased speed of processing are vital to ensure the London remains ahead of its rivals. Brokers remain the public face of the market to its clients across the world. As competition increases, brokers have a duty to protect their clients’ interests and are keen to ensure that the way London does business does not become a barrier to accessing its underwriting capacity. The emerging risk landscape presents a huge opportunity for London and its speciality expertise. As Christopher Croft discusses here, the need for the market to come together with a common purpose to deliver the technology that will drive digitalisation has never been more acute.

It will take a whole market approach to deliver success and the modernisation plans are at a crucial stage as the market looks to deliver tangible progress. The pandemic provided the market with an insight into the way in which the market can better harness technology and the hunger to grasp the benefits of change is growing.

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Croft says the modernisation of the London market has to be a collaborative exercise with brokers at its heart, as Lloyd’s continues to push ahead with its blueprint for the future he says LIIBA and its members are ready to play it part and the success of the market’s efforts will be heavily dependent on a range of factors.

“2021 was probably not quite the year that we all had hoped for in terms of our emergence from the pandemic,” he explains. “But, in general, it was a successful one for our market against a backdrop of wholesale change. We made clear progress in our mission to create the regulatory, tax and operating environments vital for our members’ business to flourish.”

On process reform, he says brokers bring with them specific expertise to help the market approach risks in different ways, and that, while there are a range of areas where work is ongoing Croft says that there are core wins that could make a real impact on the market: particularly the use of technology to enhance the speed and accuracy of accounting and settlement systems. He adds that if the market could eradicate accountancy and reconciliation errors alone it would be a huge step forward for London and its clients.

LIIBA is currently working with the market on a range of projects which he says will be key to the success of the market’s modernisation efforts:

“We have continued to support the market level work around Future at Lloyd’s and Blueprint 2. We have ensured that has been appropriate broker input into the development of the Core Data Record that will be the foundation of new, more efficient systems to support accounting and claims.”

“We have ensured that brokers have been fully engaged in the development of the next generation of PPL software and we are continuing to work with Lloyd’s to improve the systems and processes introduced in 2021 for delegated authority business.”

LIIBA and its members have also been involved in supporting the Faster Claims Payment (FCP) pilot and have been working with the Lloyd’s Market Association (LMA) to introduce the Delegated Claims Standards.

“Work has also been conducted with various parties to introduce an upcoming cross market co-lead claims agreement clause,” Croft adds.

He says that the need for the market to drive modernisation has been given greater emphasis given the opportunities that London has over the move to a more sustainable future.

He cautions that mitigating risk associated with the transition to net zero will entail investment in and adoption of new technology, the management of stranded assets, as well as insurance expenditure.

“The positive news is that the London market is well-placed to be right at the fore of this transformative process. London’s brokers have a unique combination of skills and expertise that will enable their clients to make the changes necessary to achieve the net reduction in carbon emissions required.”

“The key for London is to ensure we seize upon this once-in-a-century opportunity by brokers and risk carriers working together to give clients the guidance and the capital backing they need to embark on this transformational journey.”

Croft continues: “For the first time, LIIBA and its members have been able to quantify the level of insurance growth produced by the race to achieve net zero – and it’s a huge sum. If a significant proportion of that $125 billion came to London, it would transform our market and London’s standing for decades to come.  It will also help deliver growth in UK export earnings, UK GDP and employment.”

Looking to the year ahead Croft says: “2021 was exceptionally busy and I don’t think 2022 will be any different. The reverberations of the pandemic and Brexit continue to impact our market alongside the very significant cultural shift that’s taken place over recent years. Change is occurring at an unprecedented pace. LIIBA’s role is not only to understand the implications of those changes, but also to help our members address them and ultimately grasp the opportunities they provide.”

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“The positive news is that the London market is well-placed to be right at the fore of this transformative process. London’s brokers have a unique combination of skills and expertise that will enable their clients to make the changes necessary to achieve the net reduction in carbon emissions required.”

Christopher Croft, LIIBA

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