Lloyd’s has issued a mandate for electronic placement following approval from the Board and Council, warning of financial penalties for failures to comply.
The Corporation said that the mandate is designed to drive the market’s transformation from paper to digital and ensure the market realises the benefits of electronic placement.
From the end of the second quarter this year, each Lloyd’s syndicate will be required to have written at least 10 percent of its risks electronically.
This target will rise by another 10 percent each quarter until the fourth quarter to reach 30 percent, with further targets to be confirmed before the end of the year.
Lloyd’s said that by way of financial incentive, if managing agents meet with each of the target requirements then members of that syndicate will be eligible to receive a rebate on their annual subscriptions.
However, it warned that if managing agents do not meet with each of the target requirements, then members of that syndicate will pay additional fees, in order to contribute to the costs of modernising market systems and processes and may be subject to capital loading.
The electronic placing platform provided by PPL was launched in July 2016, initially for standalone terrorism business. Currently, 36 lines of business are available on the platform, with 29 brokers and 93 carriers signed up.
Accident and health will be the next class to go live in April, with the PPL board working with the market to agree suitable live dates for the remaining classes of business including reinsurance and aviation.
The mandate has been developed following detailed discussions with members of the Lloyd’s market, the Lloyd’s Market Association (LMA), the London & International Insurance Brokers' Association (LIIBA) and the International Underwriting Association (IUA).
Lloyd’s CEO Inga Beale said: “We must ensure that Lloyd’s and the London market moves together and continues to prioritise its modernisation efforts. We have agreed the scope and requirements for the electronic placement mandate.”
“We have a system that works and that supports face-to-face negotiations. Adoption by the market will increase efficiency, reduce back office costs, and most importantly improve customer service.”
LIIBA chief executive Chris Croft remarked: “The LIIBA Board welcomes the proposal made by Lloyd’s to mandate use of an electronic trading platform. We have supported its adoption since PPL was first initiated and there is clear evidence that the platform now provides a sound basis for the placement of London market risks.”
Meanwhile, IUA chief executive Dave Matcham said: “PPL can only be successful if it is widely used across the London market and supported by enhanced capture of data in a structured manner. Growing volumes and take-up for the system across multiple business lines is an urgent priority for 2018.
“The mandating of electronic placement by Lloyd’s will undoubtedly provide a significant boost for these objectives. The IUA supports this initiative and will continue to actively promote and engage members in paperless electronic trading. Many IUA members have already demonstrated clear support for PPL and I strongly expect this to accelerate further in the coming months.”