What does 2024 hold for London’s Blueprint Two?

With Sheila Cameron, CEO, Lloyd‘s Market Association.

The year ahead is a significant one for the London market and its desire to transform the way in which it transacts its business.

Delivery is planned in two phases as Velonetic, formerly the London Market Joint Ventures transitions all customers to a new single digital platform and processing services.

Phase one is currently scheduled for a single market cutover on 1 July. Phase two services were planned to go live in October 2024 but have been moved to April 2025, in response to a request by the Lloyd’s Market Association.

Lloyd’s say with the cutover of phase one on 1 July 2024, the market can “take confidence” having processed two quarters of data through the new digital solutions before continuing their journey in adoption of phase two services.

It added “delivering the new technology is vital to London’s ambition of creating a digital marketplace, transitioning all market participants from a 30+ year-old mainframe system to a cloud-based, resilient platform that is fit for the future”.

The preparation has been exhaustive and the strategy to create and deliver the blueprint has been painstakingly planned. It has seen companies and parties across all sections of the market working to ensure the successful delivery of a plan which is as revolutionary for the market as it is complex and challenging. As such it’s vital that we as a market allow enough time for thorough end to end testing.

Shelia Cameron CEO of the Lloyd’s Market Association says the Blueprint has to be implemented correctly, therefore it has been wise to make the clear differentiation between phase one and phase two of the plan.

“Phase one goes live in July,” she explains. “In effect phase one is looking to change the back office systems. There was a real need for them to be updated, many have not been updated since the late 1980s and early 1990s. The only real change has been the introduction of ECF in the mid-2000s.”

Cameron says the market is committed to creating a digitalised future and the ability to process the business in the market was vital.

“In someways what we are doing is creating a six-lane superhighway of digital data but then at present looking to force that highway into a country lane when it comes to the ability to process the business, which is why the work which will be achieved in phase one is so important.”

Cameron explains phase one is set to go live in July but there are steps which must be taken if the market is to be confident that the first phase of the blueprint will achieve its aims.

“Firstly, we must ensure the system works,” she explains. “We also have to ensure that the market is ready. For a business to be ready for July there needs to have been real testing of the systems you will be required to use and engagement with the software vendors to ensure that they can catch the messages and the data which will be processed.

“Secondly companies need to have signed the Digital Processing Services Agreement (DPSA). The DPSA will be issued in the coming weeks and needs to be discussed and agreed at a board level. Under Solvency II the contract is a material outsource and therefore needs to be considered and understood. The agreement will be with Velonetic, the company that will be creating the new gateway.”

She adds: “Finally there is the issue of training. There are estimated to be 10,000 people with licences to enter data into the Velonetic system.

“We also need to ensure that the cutover is safe. On 1 July we will need to turn off the old system and turn on the new. We have to be sure that the data is protected and accurately transferred and that we are confident that when we undertake the cutover it is safe. If we have a situation where the cutover is not smooth and there is a period where the market cannot operate it will cause so many issues for the market and our clients.”

Cameron adds that the LMA had lobbied to delay the implementation of phase two of the blueprint.

“Phase two will be about market access when the gateway goes online,” she explains. “We will be processing all our data through the gateway and we want that processing to be as hands free as possible. We have to be sure that if the broker puts into the system a risk that has a premium of £100, it comes out of the other end as a message to the underwriter with the same £100 price not £1000.

“The messaging coming out of the system will be used by our accountants and auditors for regulatory purposes. Therefore we are keen to see two quarter ends go through the system without problems.”

She adds; “The secondary reason that we were keen to see a delay is that people were getting distracted by phase two when there was and still is a need to focus on phase one.”

The plans for the gateway also underwent extensive consultation in the market and the results saw Velonetic look to implement a number of changes which would improve the process, and those changes required additional time.

“It also gives PPL and Whitespace time to build the connections with the gateway,” Cameron explains. “It is a huge focus across the board. We have to ensure the system is ready and the staff are trained to use it.

“We also have to make sure that there no regulatory risks to the market, the companies within it and to our clients.”

Cameron adds: “We do not want to be in a position where there is the slightest risk that the system and the process does not work. For instance if claims cannot be paid the regulator will not be pleased. I really do not think that will be the case but the importance of the blueprint to the market and its future requires that we get all areas right.”