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Lloyd's plans for multiple e-trading platforms raise questions for the market

Date 27 January 2021 As seen in Insurance Day

Standardisation of platforms and their ability to function across numerous markets will be critical.

Lloyd’s has made it clear the market is now open to independent risk placement platforms to compete with PPL, its proprietary platform.

PPL came in for criticism pre-Covid but as a result of the pandemic and the continuous efforts of Lloyd’s to enhance the performance of the platform, it has generated a significant level of loyalty in the market. As a result, while most commentators welcome the decision by Lloyd’s – as part of its Blueprint Two market reform agenda – to allow more companies to come in with alternative options, there is a considerable consensus in the market that PPL saved Lloyd’s in this pandemic.

Mark Gregory, chief executive of the international division of Axis Insurance and chief executive of Axis Managing Agency, sees the existence of a market platform such as PPL, which has proved itself in a crisis, as an advantage for everyone in the market.

“The current platforms are proven to be effective and keep the entire market functioning together,” he says. “Introducing new Lloyd’s bespoke platforms in the market seems counterintuitive when, by adopting pre-existing and proven platforms, Lloyd’s avoids duplication and unnecessary complexity.”

The adoption of PPL before the Covid-19 pandemic demonstrated pragmatic thinking by Lloyd’s and created an environment where the market could remain productive while working in a virtual environment, according to Gregory. This was greatly facilitated by Lloyd’s mandating the increased monthly usage of PPL during the quarters leading up to March 2020. “This is a relevant example of how it helps to drive needed improvements and reforms across the market, beyond the facilitation of the Underwriting Room,” he adds.

Similarly, for Graham Sheppard, head of London operations at insurance software provider DOCOsoft, the PPL model has shown the way forward. It is just a question of what Lloyd’s will be using PPL for in the future. “But I think the model is there, and Lloyd’s providing the placement standards will allow for more competition and a wider roll out of potential systems.

“The lockdown and pandemic have changed our working practices. Without technology like PPL, however, and the even older ECF electronic trading platform for claims, we would have been in big trouble with everybody having to work from home,” Sheppard says.

However, standardisation of platforms will be critical if Lloyd’s, as a multi-platform marketplace, is to function effectively. For most commentators, the benefit is not the platform itself per se, but the ability to transact business on a single standard basis that will drive value and define success.

Paul Jones, a consultant at DOCOsoft, says for risks previously placed electronically through PPL or Whitespace by market carriers and brokers (irrespective of being mandated by Lloyd’s or the pandemic to do so), these are now available for renewal in a consistent manner and there is less reliance on historic filing systems to find information. “It’s all readily available online to facilitate comparisons and linked renewals. Alternative options for placement need to adhere to agreed placement standards so data can be consistently applied to reports and claims systems that rely upon this information,” Jones says.

Sticking to success

The message is the market needs to stick with successful technologies such as PPL and Whitespace, while continuing to stay relevant and looking to enhance its ability to transact business in a new way. “It is very unlikely we will go back 100% to the physical Underwriting Room and that way of doing business because we have proven that we can all work remotely when we need to. Initiatives like ECF and PPL are what has helped us to do that, so we need to build on those sorts of platforms,” Sheppard argues.

However, Ben Rose, co-founder and president of Riskbook, a Lloyd’s approved reinsurance risk placement platform, warns the market, in its newfound appreciation of the qualities of the platform, should be careful not to stick too closely to the underlying PPL vision of a digital risk exchange. Rose, who started his career at the Corporation of Lloyd’s and since then has developed the Riskbook reinsurance platform from scratch, has been tracking the market’s journey to digital very closely over the past seven years or so.

Blueprint Two, he says, is a huge step forward. “It shows admirable consideration towards the effectiveness of efforts to date and the diverse needs of an enormously complex ecosystem. But from my perspective, the greatest limitation of the initial PPL vision was that it focused on creating an electronic means of communication for those already within the Square Mile, who, owing to their proximity to one another, probably needed digital the least. This is an issue, particularly in the reinsurance world, where very few panels feature exclusively Lloyd’s capacity,” Rose adds. He therefore welcomes Blueprint Two’s preference to partner with approved third-party placing systems, like Riskbook, instead of building in-house. “Demanding that brokers use ‘something else’ for their Lloyd’s markets, as a further administrative task in addition to operating their own preferred solutions, would have presented a huge headache and made it harder, not easier, to do business at Lloyd’s,” Rose says.


For most commentators, multiple platforms are a good thing for the market, but particularly for brokers, who will, in future, have greater choice in terms of how they conduct their business, not just being tied to one platform like PPL, which only works with the Lloyd’s market. The critical realisation with Blueprint Two is that the power of digital is not only to keep records, but also to provide efficient access for brokers all over the world.

Ben Potts, UK managing director at technology company Novidea, says this is important as many of the large complex risks placed by brokers run across the Lloyd’s, company, and international markets. “The bigger brokers and insurers will be free to develop their own platforms, but smaller independent brokers will be free to work with what works best for their business, which is great news,” Potts adds.

The standards imposed on Lloyd’s-recognised placement platforms such as Whitespace, Riskbook and Tremor before the advent of Blueprint Two contributed significantly to the security and the ability of these platforms to integrate into the wider Lloyd’s technology ecosystem.

The hope now is that with Blueprint Two, Lloyd’s will use the opportunity to improve the quality of third-party platforms across the board, according to Rose. “From brokers and underwriters alike, we’ve heard a clear message that platforms created by the brokers in-house are simply not up to scratch, in particular when it comes to user experience,” he says.

For Rose, it is critical that third-party platforms are of a sufficient standard, are designed by capable, independent technology specialists with re/insurance know-how and are able to support multiple brokers. “Nobody is looking forward to swapping the vision of a Lloyd’s-built platform for a separate platform for every broker, especially given the absence of quality we’ve seen from platforms in the market to date,” Rose adds.

For other commentators, by offering the market choice, Lloyd’s is ensuring ongoing competition will continue to drive an increase in the quality of the platforms available. “If the circumstances of 2020 have taught us anything, it is that the insurance market is open to change and any digital technology deployed in London needs to be able to work on a global scale,” Marcus Broome, chief platform officer at Whitespace, says. He also points out there is a growing understanding that, while some larger brokers and insurers have their own platforms, the market would not be able to operate if every firm did the same.

Reducing acquisition costs

But whatever the merits of a single or multiple electronic platform market, most commentators agree the critical priority for Lloyd’s is to simplify its processes to be more efficient, simple and more cost-effective. That can be achieved in a number of different ways, according to Paul Bermingham, managing director of Advent Insurance Management. “But it is unlikely one solution will be sufficient for such a wide-ranging global market such as Lloyd’s,” Bermingham says.

For standard risks, Lloyd’s has PPL and Whitespace, which between them are helping achieve the ambition of increasing the number of risks placed electronically in the market, with the system being broadened by other platforms to include more complex risks.

For Bermingham, whether it is one big platform or several smaller ones is less important than the need for the solution to be far simpler. Getting platforms to work in a common way that harnesses their combined strength to drastically reduce the 40% acquisition costs is the challenge.

“The fact that there are many other systems out there that could potentially boost this further is no bad thing. Lloyd’s, in enabling the market to develop its own systems, will allow the market to adopt the best of the best, continually improve and not be limited by a single, Lloyd’s- administered software solution,” Bermingham says.

The market also needs to be careful that larger organisations do not have a disproportionately big influence over how electronic trading platforms are structured and developed, which can be to the detriment of smaller entities that serve important niches. “To retain Lloyd’s standing as a market that can insure anything, future development ought to include these smaller stakeholders,” Bermingham says.


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