Modernisation of the London Market continues with TOM
As highlighted in the London Market Group’s London Matters 2017 report, London continues to provide a thriving insurance and reinsurance market for a wide variety of risks. However, the report recognised that modernisation is essential to keep up with the rapidly changing international business environment. The London Market Target Operating Model (TOM) is a critical part of this modernisation and its initiatives will soon become a regular feature of all London Market business.
Who is TOM?
TOM is a LMG programme of new and existing projects designed to make the London Market a more accessible and cost-effective place to do business.
It was first proposed in 2015 as a means of supporting the London Market and is one of the LMG’s four work streams (the others being business environment, talent and ‘Why London?’). It aims to enhance existing, successful market practices by using improved technology, focussing on electronic placement, one touch data capture and enhanced central services. Each entity within the London Market process - policyholders, brokers, coverholders and carriers – will benefit from these changes. The funding received (£250 million over five years) is indicative of the commitment to deliver a superior working model, notwithstanding the significant financial benefits that are anticipated in return.
The projects include:
- Placing Platform Ltd (PPL) - An electronic placing platform which enables brokers and insurers to quote, negotiate, bind and endorse business digitally.
- Central Services Refresh Programme – This allows brokers to submit accounting and claims movement data through an online submission portal or through brokers’ own systems in a format that is in line with global insurance messaging standards.
- Delegated Authority – A central repository to facilitate the collection of data in line with the data standards.
- Data Integration - Facilitates seamless sharing of information through common data standards.
- Structured Data Capture - A simple online service that converts the content of a Market Reform Contract into consistent, electronic data in line with ACORD standards.
While change can sometimes be met with an element of resistance, it is impossible to ignore the growth and speed with which advances in technology are reshaping the way business is conducted.
These initiatives are already being used in several classes of business and both Lloyd’s and the International Underwriting Association (IUA) have established targets to ensure that adoption of the PPL is taken up across as many business lines as soon as possible. The PPL can already be used on 36 business lines and, as of March this year, approximately 10% of the London Market’s total transaction volume (15,000 risks) were bound via the PPL. Full adoption of the TOM initiatives will assist the London Market’s interaction with the global business community.
London will not lose its uniqueness by implementing these measures. Instead, they will assist with facilitating a more streamlined, coordinated system, which will allow greater time for face-to-face contact on the more complex and demanding issues.
The aim of the TOM to make it easier to do business with the London Market is a continuing one. Even when the work started under the auspices of the TOM is completed, there will be a need to continue modernising the London Market if it is to stay relevant.
Single Claims Agreement Party
An additional example of collaboration for the benefit of the market as a whole is the recent introduction of the Single Claims Agreement Party (SCAP) which has been launched by the London and International Insurance Brokers’ Association, Lloyd’s Market Association, IUA and Lloyd’s.
The aim of the SCAP (which is outside the TOM project) is to “enable quick and efficient authorisation of claims by allowing policy leaders to agree non-complex payments up to £250,000 on behalf of following carriers.” This is further evidence of a coordinated approach aiming to enhance market efficiency, thereby widening the appeal of conducting business in London.
The integration of the TOM is crucial to maintaining and progressing London’s position in the global insurance market. It also reinforces the strengths of the London Market, as highlighted by Louise Day, Director of Operations at the IUA:
“One of the great things about the London Market is how all the parties can come together when we need to mobilise to change the way we do things. The TOM has been an excellent example of this and the advances we have made, particularly in such a culturally sensitive area as PPL, proves that we can do the difficult things. We will continue to improve our technology and processes so that we can attract more business to London.”
Implementation of the TOM initiatives will allow London to be better placed to work more efficiently and cost-effectively with international business.