The London insurance market achieved two significant milestones recently with the admission to Lloyd’s membership of three non-U.K.-based brokers, and the launch of Ins-sure Services Ltd., which will assume the responsibility of managing back office procedures for both Lloyd’s and the International Underwriting Association (IUA).
The two initiatives were given top priority under former Lloyd’s head Max Taylor, and have now been brought to fruition under his successor Saxon Riley.
Lloyd’s CEO Nick Prettejohn, who has been actively involved in implementing both projects, explained the reasons for the changes in a foreword to the broker application materials.
“With the increasing globalization of business, it is important to streamline the administrative processes associated with the placing and servicing of business.” Prettejohn stated. “This is what the market reforms being proposed under LMP 2001 [the new accreditation standards] are about. They are intended to secure a more open and efficient environment in which customer service is improved, money moves rapidly, procedures are simplified, and costs reduced. In short, everyone wins—clients, brokers and underwriters.”
The new procedures were first proposed in October 1999. Last month, when six new Lloyd’s brokers were admitted, it was the first time in 300 years that they weren’t all in London.
“These brokers/intermediaries represent the first tranche to be accredited under the new rules for direct access announced last year and can begin operating in the market with immediate effect,” the announcement stated.
They are: Benfield Greig Asia PTE Ltd. – Singapore; Benfield Greig Paris S.A. – France; Group Eyssautier – France; Grosvenor Brokers (American) LLC – U.K.; SAIL (Sté. Anonyme D’Intermediaries Luxembourgeois) – Luxembourg/U.K.; and BDB Ltd. – U.K.
As all but one have strong U.K. ties, their admission is somewhat less revolutionary than it might appear. Nonetheless, it opens the way for more foreign brokers to apply—and many have.
Lloyd’s spokesman Adrian Beeby indicated new brokers would probably be admitted between two and four times a year, and confirmed that a number of them would be based outside the U.K.
“There’s no set time or number, it depends on how many applications we receive,” said Beeby. “Right now there are two major U.S. brokers going through the accreditation process, and we’ll probably make an announcement that more have been admitted by midsummer.”
Paul-Eric Eyssautier, Group Eyssautier’s managing director, summed up why his group found Lloyd’s attractive. “As an international marine broker, I felt the next logical step for us was to apply for either the ISO quality mark or Lloyd’s access,” he said. “I chose Lloyd’s because the accreditation process was more practical and efficient, and the Lloyd’s name counts for much more in the international marine community.
“Gaining accreditation to Lloyd’s does count as a quality mark. It also allows us to become a fully international placing broker, able to take advantage of the globalization of the insurance industry.” Lloyd’s PR department couldn’t have put it better.
The announcement that Ins-sure Services Limited had begun operations on May 1, 2001 signaled the success of two years of hard work to modernize the entire London insurance market.
The new company is an integral part of Lloyd’s cooperative venture with the TUA. Discussions about harmonizing and eventually combining the back office operations of Lloyd’s and the IUA and bringing them into the Internet age first began in May 1999.
Last October, plans were unveiled to achieve this goal by forming an independent joint venture with information and technology specialist Xchanging, which owns 50 percent of Ins-sure. It has now officially begun the Herculean task.
“In fact,” said Beeby, “they’ve been working on harmonizing procedures and working out an international management system over a very intense six months.”
Ins-sure is now committed to “producing within six months detailed service definitions and service standards for approval by the panels representing the interests of Lloyd’s and the IUA.”
“There may not be any noticeable immediate effect,” Beeby continued, “but eventually it will be substantial. They’re going to build a big international business which will reach well beyond London.”
That’s the announced goal of Dave Andrews, CEO of Xchanging, who will also fill that position at Ins-sure. Sir Laurie Magnus, a 45-year-old investment banker formerly with Credit Suisse First Boston, was named as chairman, and Michael Taylor, currently the director of insurance services at Lloyd’s, will become vice chairman.
“With an estimated [$28.6 billion] annual turnover of premiums and claims settlements, Ins-sure will start trading as one of the largest insurance services companies in the world,” the announcement stated.
How well and how quickly Ins-sure modernizes Lloyd’s Policy Signing Office (LPSO) and the IUA’s London Processing Centre (LPC) will indicate its future path. It’s an independent company and eventually aims to compete for business beyond Lloyd’s and the IUA.
Tony Medniuk, IUA deputy chairman who runs the LPC, underlined the overriding importance of the new structure. “This is about much more than just improving and harmonizing the existing functions of the LPC and LPSO, though that alone will bring our members substantial business benefits. It will also provide our market with a means to make full use of Internet technology over the next few years.”
A reliable system of electronically transferring information is also an absolute requirement for non-U.K.-based brokers to fully participate in the London market.
The only way to guarantee equal access for a broker in Los Angeles with his U.K. peers is through the Internet. In that sense “globalization” assumes a very real meaning.
Without the technical means available to implement it, building a worldwide brokerage network would be impossible.
That is Lloyds’ ultimate goal. “All of us are determined that London will continue to be the center of the world insurance market,” said Prettejohn. “This new venture will play a key role in securing that competitive future.”
To emphasize the importance of the steps it has taken, Lloyd’s also changed its website designations.
From now on, www.lloyd’s.com is for insurance professionals only, and gives them access to the entire range of the Lloyd’s market. www.lloydsoflondon.com replaces it as the general information site.
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