In a speech to the annual Xchanging sponsored conference in Brighton, Lloyd’s chief executive Richard Ward said the London insurance market must “get back to basics” and provide a first class service to customers – or face the consequences.
In his opening remarks, Ward noted that the U.K. has a reputation for providing both the best and the worst services. “As an industry,” he continued, “it’s a similar story. We are paradoxically renowned for providing the very best and worst service standards. Lloyd’s and the London insurance market have made their names – and indeed we pride ourselves – on providing innovative insurance solutions to our customers.
“But sadly, we also have a reputation for having some of the most archaic back office processes, which can mean that some insurance policies have expired before the policy documents are actually delivered to the customer. I’m afraid we simply can’t continue to fool ourselves that one makes up for the other. We are basically a service industry that seems to have forgotten what its customers want and need.”
He noted that the London insurance market “deals with some of the most complex global risks and contains some of the brightest minds,” but, in what he characterized as “baffling to an outsider,” it has an IT problem. It “cannot grasp technology and process change.”
In Ward’s view – he comes from outside of Lloyd’s establishment- “it’s not about ability, it’s about aptitude. The industry has to want to change. In recent years, there has been evidence that things are changing, but progress is still too slow. We need to refocus attention on service standards. This is key to keeping business, driving down costs and effectively competing with our competitors.”
He outlined the steps that had been taken, and indicated that, according to recent customer surveys, progress was being made. The second wave of research on customers’ needs found that the “key areas customers want us to improve remain: speed of policy documents being issued; keeping customers informed of progress on claims; and speed of settling those claims. Brokers also said they would like to have even greater access to underwriters, with more information on their availability and waiting times.”
Ward reminded his audience of the necessity for modernization and the need to adopt (and use) electronic systems by recounting his tenure at the International Petroleum Exchange. As its CEO he led its transformation from a ” traditional open Outcry market, trading on average 180 million barrels of oil every day” to electronic trading. By doing so he saved the IPE.
While he doesn’t see the same exact transformation happening at Lloyd’s, he nonetheless warned that substantial additional modernization needs to continue. As part of that vision Ward stated: “An efficient trading floor is also central to my vision. I can see that Lloyd’s will have a trading floor for the foreseeable future, but it has to be supported by efficient business processes. As I said earlier, we have made some good progress recently but there is still some way to go.
“We must use technology intelligently and use intelligent technology. Technology has the potential to revolutionize the way that we work, but there is no single system that can instantly change the way the market operates. Bite-size solutions that address specific problems and combine to have maximum impact are far more likely to succeed than a single, one size fits all approach.
“We must develop new ways to bring business to the market – you can be sure that our competitors will – and so peer to peer systems and electronic placement is to be welcomed. Anything that makes it easier to do business at Lloyd’s, and is likely to keep the customers coming here, is obviously a good thing.”
After giving the details of what he feels remains to be done, and offering some suggestions as to how progress should continue, Ward concluded: “For too long as an industry, we have ignored the needs of our customers and relied on the specialist nature of our business to win and retain customers. Those days are now gone. Increased competition and the changing perceptions of our customers mean that the follow up to the sale is just as important as clinching the deal.
“If you’ll excuse me sounding like a politician for a moment, we need to get back to basics. We’ve done the hardest part. We’ve secured the reputation for covering the world’s most complex and difficult risks. Now we need to sort out our pipework to ensure that we provide a truly first class service to our customers.
There is a lot of work already underway to do this, but progress has to be quicker. There can be no higher priority.”
The full text of Ward’s speech is available on the Lloyd’s Website at: www.lloyds.com.