For the underwriters and brokers occupying the trading floors around the expansive atrium at the heart of the Lloyd’s of London insurance market, business is thriving.
This centuries-old institution—a marketplace boasting over 50 insurers and countless brokers offering policies that span from cyber threats to natural disasters—has successfully navigated past Covid-related disruptions and a series of expensive natural catastrophe years to achieve its best underwriting performance since 2007.
Management’s initiatives to assist some of the market’s underperforming insurers in improving their performance have played a significant role, along with the increasing prices for insurance. The announcement in September of former senior Treasury official Sir Charles Roxburgh as its next chair was positively received.
Roxburgh remarked upon his appointment that the market provides “valuable protection to its customers and robust financial returns to members and investors.”
However, this optimistic news masks an apprehension among senior industry figures regarding changes at the top of Lloyd’s amid ongoing issues with a critical IT project, as reported by several sources who spoke to the Financial Times.
Some are eager for Roxburgh to commence his role as soon as possible to address these challenges, even before his official start date in May.
A primary source of frustration has been “Blueprint II,” an initiative aimed at overhauling the market’s fragmented and outdated back office systems. This IT upgrade was initially outlined in 2019 and revised the subsequent year, but it has faced numerous setbacks. An announcement made in June scrapped a proposed October launch.
“It has been promised continually, yet not delivered, and now we are looking at 2025,” lamented one senior executive in the market. “Frustration is running high.”
Another voiced discontent about the lack of transparency regarding the project’s progress. “It hadn’t been [developed] to the extent that everyone believed it had. Back in January, they were telling us it would launch in July.” A third party mentioned that this situation presents a “credibility issue” for Lloyd’s senior leadership.
Lloyd’s opted not to provide a comment for this article.
For a long time, Lloyd’s has grappled with the challenge of establishing a unified IT platform for the market. Currently, participants rely on a patchwork of often outdated systems, featuring various data standards and a plethora of manual tasks, with much trading still conducted face-to-face.
The initial ambition is to create a unified system where claims and policy data are recorded in a standardized fashion for universal visibility. The broader goal would entail quicker and more efficient processes, seamlessly connecting to platforms where policies are negotiated and facilitating the automated settlement of the billions of pounds in claims processed by the market each year.
Nevertheless, executives indicate that many efforts have been impeded due to the challenges of coordinating a single system for the entire market, coupled with the intricacies surrounding certain insurance and reinsurance policies.
Some senior market stakeholders express bewilderment at the ongoing delays, particularly given that the project had been divided into two phases: upgrading back office systems and standardizing data first, followed by implementing the more ambitious changes later.
The corporation that manages Lloyd’s “accepts responsibility for the delays but is optimistic about delivery in 2025,” according to an informed source. The project falls under the remit of Velonetic, a joint venture between Lloyd’s and IT consultancy DXC. That source added that “market testing revealed significantly greater complexity in the interactions between market and settlement systems, leading to delays.”
Lloyd’s Chief Operating Officer Bob James was appointed the head of Velonetic this year, and the unit has promised to enhance transparency and provide a “clear timeline.” DXC has not responded to requests for comment.
Others see similarities with a past attempt to digitize processes. In 2016, the Lloyd’s market began utilizing Placing Platform Limited, a digital framework for “placing, signing, and closing” insurance contracts with other market participants.
Robert Iremonger, a risk consultant within the Lloyd’s market, noted that it is not often utilized as intended.
“Many underwriters still resort to using paper slips in some cases, and the broker subsequently enters them into PPL,” he explained. “This ends up duplicating the workload.” PPL stated that approximately 70 percent of contracts uploaded to the system had already been agreed upon in the market.
John Mason, the new Chief Executive of PPL, which is majority-owned by Lloyd’s, indicated that the organization is exploring ways to bolster adoption, such as providing data to traders to support their underwriting decisions.
In addition to dissatisfaction regarding the slow progress of Blueprint II, several senior individuals in the market express concern about tensions within the upper management of Lloyd’s Corporation, which oversees the broader Lloyd’s market.
The corporation is currently in a transitional phase, with its new chair coming into position, interim COO George Marcotte having just started, and chief of markets Patrick Tiernan on temporary medical leave.
Chief Executive John Neal has temporarily assumed Tiernan’s regulatory duties overseeing the market performance of Lloyd’s insurers, adding to his already expansive regulatory and management responsibilities.
One insurance executive stated that the corporation’s dependence on Neal for several critical roles poses an “operational risk.”
An insider familiar with the corporation’s perspective underscored the presence of a “strong bench of talent” beneath the top executives, which is instrumental in navigating the situation.
Roxburgh’s responsibilities will likely include the appointment of a successor for Neal, who has held the role since 2018 without a predetermined term. Tiernan is seen as a leading internal candidate, according to knowledgeable individuals.
Roxburgh is slated to return to the UK from the US in February and is expected to begin shadowing outgoing chair, Bruce Carnegie-Brown, soon thereafter, as indicated by sources close to the plans.
According to industry veteran Michael Wade, Roxburgh is an “outstanding intellect with a profound strategic understanding” of Lloyd’s.
He further noted that Lloyd’s faces significant challenges, particularly with technological advancements. However, its unique structure—a marketplace filled with highly skilled underwriters and brokers supported by an ecosystem of specialized consultants and lawyers—positions it favorably to overcome these hurdles. “Its strengths far exceed its weaknesses.”