Lloyd’s of London chief executive John Neal said he is prepared to force through his proposed changes to the world’s leading insurance market, even if some of them face opposition.
Mr Neal unveiled a series of measures in May designed to cut costs and pull more business into Lloyd’s. They included splitting the market into two, with one online system for standard policies and another system for more complex contracts.
Mr Neal said on Thursday a 10-week consultation process had revealed plenty of support for his ideas. But he added that, once the next steps had been decided, brokers and underwriters, who negotiate the policies, would have to sign up.
“At the end of it, I’ll just say ‘this is the way we do things around here’ so it becomes the ultimate mandate,” said Mr Neal. “I don’t think you can create choice.”
In the past, Lloyd’s has struggled to persuade the brokers and underwriters to change voluntarily.
An electronic placing system called PPL, designed to make the system for creating insurance contracts more efficient, was first introduced in 2016 but it has only properly taken off in the past year after Lloyd’s mandated its use.
“You have to consult widely and make sure the solution is utterly fit for purpose . . . but when you do that you have to draw a line and say ‘this is the way we’ll do it’,” said Mr Neal.
One of Mr Neal’s more controversial proposals has been the electronic exchange for straightforward policies. Some of the London-based insurance brokers think the system could take business away from them.
Mr Neal insisted his changes would bring in new business for the brokers. “We’ve been articulate in saying this is designed to create opportunity. It’s designed to create a bigger marketplace . . . But we will have to change. We can’t carry on the way we are.”
He said that, if brokers were concerned, they should make their feelings known and play a part in creating the new system.
Mr Neal said that he would provide another update in September about what will happen and when, and how much the changes will cost.
One of the earliest changes is likely to involve streamlining claims payments.
“There is a lot of work we can do on claims,” said Mr Neal. “There will be super sharp quick wins that you’ll see in 2019.”
He said that over half of Lloyd’s claims cost less than £5,000.
“We have a huge volume of smaller claims. A simple triaging of those losses would allow them to be dealt with more efficiently, ie more cost effectively, and a lot more quickly.”
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