TOM Move Opens London to Death of a Thousand Digital Cuts

On the day that Lloyd’s gets set to reveal the blueprint for its Future at Lloyd’s initiative, a leading IT specialist has said the decision to wind down the TOM initiative highlights that London still has not learned the lessons of the past.

Darren Wray CEO (pic) of boutique re/insurance IT consultancy fifth step says the move to put the brakes on the London market’s Target Operating Model (TOM) put London in danger of seeing its business stolen by other markets.

“Lloyd’s of London needs to get a better grip on its digitalisation plans, or it will potentially lose ground to other insurance markets and territories,” said Mr Wray.”Every few years Lloyd’s goes through the same cycle of coming up with new digital transformation initiatives before changing tack slightly, or they get another one of the big four consultants to advise – and I use the word advisedly – on a slight variation – or even a large variation.

“Another £50 million is piled into the spending pot, to be spent over the next couple of years. It’s Deja Vu all over again. The market as it stands today can’t sustain that.

“Those of us who have been in the market a long time recognise the signs of the cycle beginning again. The approach that Lloyd’s are taking is flawed. They are trying to give the market all the services that it needs but the Managing Agents don’t necessarily want that. They want to operate in a standard way, maintain operational efficiencies by keying data in only once, with data flowing from insurer to broker and on to claims in a full life cycle.”

In announcing the TOM Move LMG CEO Clare Lebeq said: “The LM TOM has worked closely with the market to successfully deliver PPL as the world’s first electronic placing platform for insurance, simplified delegated authority processing, and has delivered other market solutions and infrastructure including structured data capture, most of which are in ‘run’ mode now and should reduce the complexity and cost of doing business.”

“Further development of these solutions will take place as part of the Future at Lloyd’s – although usage will still be available across the entire London Market. The extensive work already completed on PPL and DA SATS, the delegated authority platform, will be taken forward as part of the developments that Lloyd’s will release in its Blueprint.”

It is not a view shared by Mr Wray.

“PPL is further along than the other initiatives, but it’s still nowhere near as far along as it should be at this stage, particularly when you factor in the amount of money that has been spent,” he said. “If London doesn’t get a grip on its transformation strategy, other jurisdictions will sneak in and steal small amounts of business from under its nose. It might be digital death by a thousand cuts but given enough time this trend might take an increasing amount of business from London – and with the uncertainty of Brexit looming, this could further weaken the market’s position.

“Insurance market practitioners of a certain vintage might remember that in September 1996, Lloyds of London implemented its Reconstruction and Renewal plan (R&R) – an extremely complex market restructuring. It seems to me that what is needed more than 20 years later is R&R 2.0.

“The original R&R was ultimately successful in boosting attempts to separate the problems of the past – basically claims legacies – from the operation of the ongoing market. On the back of this, the reputation of the Lloyd’s market as a whole was enhanced with a number of reforms being made including a strengthening of both the “chain of security” at Lloyd’s and the regulatory management in the market. R&R 2.0 could focus on separating legacy technologies from the ongoing technologies and processes of the future. Bold thinking is required at both a central Lloyd’s level and among the market’s participants.”