Lloyd’s of London opened its doors for business on 1 September after a five-month closure.
But the largest single trading floor for marine insurance may never return to its traditional way of doing business.
A digital revolution happened during lockdown, from which the London market hopes to emerge more efficient and competitive.
Traditional face-to-face business will be less prominent at Lloyd’s. Since reopening, the iconic One Lime Street building has limited access to 45% of the brokers and underwriters who usually walk its trading floor. Each business line has been allocated a specific day to work in the offices. Wednesday is marine day.
Brokers are shuttled in and out in a one-way traffic system, while negotiations at the underwriters’ box take place on either side of a perspex partition.
New virtual underwriting rooms will limit person-to-person interaction further.
The evidence of the past five months has been that brokers and underwriters can work remotely.
International Union of Marine Insurance president Richard Turner said the business style of Lloyd’s of London is similar to the way marine insurance business is conducted generally in London.
Human relationships form an important part of the London insurance business culture, which he would like to see continue. But there is a recognition that online placement needs to progress to keep costs down and the City of London competitive.
'Embrace the change'
“The London company market operates in a similar way to Lloyd’s, where relationships and face-to-face contact are an important part of the market. But let’s not kid ourselves, this process of digitalisation was always going to happen,” Turner said.
“There was a lot of resistance to online placement, but the pandemic has forced everybody’s hand. This is a change that London needs to embrace, because the cost of doing business is too high.”
Lloyd’s chief executive John Neal said the measures in place in the building are temporary and things will return to normal. But the success of online placement during the pandemic has encouraged him to raise the targets for automated placement.
For the third and fourth quarter of this year, Lloyd’s increased its target for submissions and quotes from 25% to 30%. A target to have 80% of “risks bound” online over the same period is being maintained.
The move comes after data from the London Market Group showed that the automated Placing Platform Limited experienced a 43% increase in usage in the second quarter as most business was placed remotely during lockdown.
One problem that has emerged with reduced human interaction in a hardening market is that brokers are emailing their requests for bids to an increasing number of underwriters electronically, filling up their inboxes.
Insurtech company Concirrus has developed a system that automatically provides a risk assessment and pricing of such requests, which can free up the underwriter to carry out portfolio management and quoting for more complex risks.
