Speaking at a business briefing at the Managing General Agents’ Association, head of policyholder and third-party oversight at Lloyd's, Paul Brady outlined that Lloyd’s priorities for 2020 were underwriting performance, strategy and culture and people.

He also detailed how the Future at Lloyd’s initiative is expected to impact delegated authority partners.

Underwriting performance

He said: “We are going to keep up our relentless focus on ensuring underwriting continues to improve. A few syndicates have shut down recently; however, these businesses had not been making a profit for several years and were dragging down the results of the Lloyd’s market as a whole.”

Brady highlighted no date has been set yet about John Hancock’s replacement.

“We are recruiting Hancock’s replacement now. John Neal is adamant that his/her successor will be continuing the work that Hancock has started, which means a continued focus on the worst performing Lloyd’s businesses.”

“My view is very clear: binding authorities that have a track record of profitability will always find a home at Lloyd’s. But to ensure the long-term success and viability of the market, we need to continue to push for performance front and centre.”

He warned, however, that tough decisions will be made by Lloyd’s’ managing agents as they manage their portfolios.

“This inevitably may mean that some coverholders find that binders are not renewed if they are not performing well or they might face changes in their capacity. In extreme cases, binders could be cancelled mid-term, but only in case of material misconduct or should there be a significant credential concern.

“I always expect syndicates to honour their contractual commitments and only issue early cancellation in line with those contractual terms. And even then, they should only be doing so in the most exceptional circumstances.”

Brady also stated that Lloyd’s remains very much open for businesses but wants them to be sustainable, innovative and profitable. For instance, he explained that £7bn worth of new business had been approved in the 2020 business planning cycle.

Strategy

Referring to the Future at Lloyd’s initiative, Brady described the past few months as a transition phase.

“The past few months have all been about getting everything in place ready for delivery, expected to start from Q2 2020.

“Some of the work in the transition phase has involved progressing the plan to build a single, seamless delegated authority process, whether that is through registration, submission, binder reporting and claims. This will be a main component of the digital Lloyd’s.”

He acknowledged that Chorus “has had a few bumps” but said that Lloyd’s remained committed to delivering this project, consisting of a new platform designed to streamline binder agreement creation, registration and compliance.

“It is a critical centrepiece of our data-first DA process. We will be making an announcement shortly with an update.”

Lloyd’s is also due to revise the schedule of the standard binding authority agreement in 2020, in response to a call from the industry.

“I can announce that we are working on the termination clauses in the binding authority agreement with the LMA to revise that schedule and make sure that they are appropriate and fair for all”.

Brady believes that two solutions included in the Future at Lloyd’s will particularly benefit coverholders.

“The risk exchange will enable coverholders to upload their products for non-complex risks onto the exchange where they will be visible to brokers, thereby increasing their market reach. The user interface will also make working with Lloyd’s much easier.”

Also, the claims solution which is expected to improve claims management process for coverholders and TPAs, as customers will be able to see where their claim is within the process.

“Eventually the claims portal will enable some non-complex claims to be paid automatically,” Brady explained.

Culture and people

Brady said that 2019 was a wake-up call for us and that Lloyd’s reacted quickly to face the most negative findings contained in the culture survey.

“We all know that attracting talent into insurance is difficult, and the first step is to build a culture in which everyone feels valued and respected.

“Coverholders have a critical role to play in this because they are who policyholders deal with when interacting with Lloyd’s. So really, the impression coverholders give is the impression that customers get of Lloyd’s market.

“What I would ask is that coverholders should think of what they are doing in terms of culture and whether that is consistent with the work we are doing at Lloyd’s.

“We do have plans in place to continue our work on culture, starting with the launch in Q2 of a culture dashboard that will allow us all to benchmark our progress in this important area.”

Separately, Brady called for flexibility regarding people and talent.

“The future of Lloyd’s will require a different role for the Corporation, new skills in some areas and so on and the same will be true for managing agents, for brokers and for coverholders.

“The business models we know today are going to be disrupted and we need to have the right people, the right skills and the right places to make sure that we can ride with those changes.

“Over the next year, we will be working with the market associations to agree on an approach to creating the market workforce of the future.”

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