Ward Pushes Lloyd’s Reform

A little less than a month after he assumed the position of Lloyd’s CEO, Richard Ward is proving to be the kind of hands on executive Lord Levene and other Lloyd’s managers wanted.

His first major initiative – a letter sent to all Lloyd’s market members -makes it clear that “achieving reform of business processes is one of Lloyd’s key strategic aims, and it is a clear priority for me.” He praised the progress made so far in achieving contract certainty (the average MGA is around 80 percent compliant), but he also indicated that after consultations he has come up with a plan to “drive reform of the placing process harder, in support of both the contract certainty target and wider process efficiency.”

As a result Ward wrote: “I am now proposing that Lloyd’s moves quickly to implement a new approach to the contract documentation process which will improve efficiency and client service. In summary Lloyd’s proposes to:
— Publish a simple set of checks which must be completed before the contract is entered into. These will be a rationalized set of checks based upon those in the existing QA tool;
— Allow each Managing Agent to perform the checks itself or to place reliance on the leader or a suitable service provider;
— Facilitate immediate issue of the contract; at minimum to produce and issue a client copy within 30 days; and
— Allow Managing Agents and Brokers to agree on the branding of the client copy provided it includes agreed Lloyd’s branding.

While those proposals may appear as simply technical improvements, they are in fact a significant departure from current procedures. The 30-day requirement puts in place a very rapid timetable (in Lloyd’s terms) for producing policies. Moreover the burden of doing so is now squarely on the shoulders of the Syndicates’ managing agents.

“All managing agents will be responsible for implementing and complying with this approach,” Ward plainly wrote, “supported by tools such as model wordings. Managing agents will need to establish processes to measure compliance and for reporting compliance statistics to Lloyd’s. Managing Agents’ results will be validated by Lloyd’s through a statistical sample audit regime, which will supersede the LMP audit process, and will be subject to Lloyd’s oversight through existing risk management reviews. Where appropriate these results will be published to help followers determine if they wish to repeat checks themselves or rely upon the Lloyd’s leader.”

While acknowledging that “these proposals significantly affect the roles of Managing Agents, brokers and service providers such as Xchanging Ins-Sure Services (XIS),” Ward noted that there was “already strong support for these proposals among LMA members and a number of Managing Agents.” He noted that the G6 [Beazley, Amlin, Catlin, Hiscox, Wellington and Kiln] “are well advanced in planning their adoption of this approach. The next step is therefore to gain buy-in for these proposals across the broker and Managing Agent community.”

Ward gave very little time for any objections, setting a date of June 5 for any feedback, and said he and his team “wish to agree a timetable for implementation by the middle of June enabling some pilot implementations for specific classes of business to start at the beginning of July 2006.”

He did assure the Lloyd’s community that his office stands ready to work with the market to implement his proposals, “their practical implications and the benefits that will arise from them.” He’s set a mid June date for a “market meeting” to “communicate and discuss progress in more detail.”

In conclusion Ward wrote: “We look forward to working with you on this significant development, in order to see the proposals through into practical implementation. I believe that this is a clear opportunity for us to take major strides in reform, which will benefit both the Lloyd’s community and our clients.”

Topics Agencies Excess Surplus Lloyd's