It has been moving slowly to process some of its trades online, but many market participants are seeking faster change in the market, where much business is still done face-to-face in Lloyd's City of London tower. Simplifying and automating its processes could cut the cost of doing business at Lloyd's to 25-30% of premium revenue, compared with a current 40%, it said in an update to a new strategy outlined in May.
"We are trying to take a step in the right direction," Lloyd's chief executive John Neal told Reuters, adding that initial estimates for the costs of the changes were in the "low hundreds of millions" of pounds. One of the new electronic exchanges will focus on simpler risks and the other on more complex risks, with "early builds" of both in place by Dec 2020, Lloyd's said. Improved technology will be rolled out in 2021 and 2022.
Lloyd's said that to pay for the changes it could use surplus funds, raise senior debt or securitise business against future income flows, but would not increase the levy it charges members. In an attempt to compete with centres such as Bermuda, Lloyd's is also looking to attract participants offering insurance-linked securities such as catastrophe bonds.