Nowhere to run

This article was first published in The Insider Briefing and The Insurance Insider on 19 December.

Be warned brokers, if you’re not already electronically placing business in London, you’ll have to be by next summer – or face having your Lloyd’s licence taken away.

That’s the message coming out of 1 Lime Street this week, after sources told this publication that the Corporation is preparing to mandate all Lloyd’s brokers to sign up to an e-trading platform.

Currently 20 brokers are understood to be active on PPL, up from just six a year ago.

But adoption remains dominated by the bigger intermediaries. Figures released by the London & International Insurance Brokers’ Association last week estimated that the top four brokers account for 63 percent of all risks placed.

This, certain quarters of EC3 will argue, is preventing syndicates that would otherwise write all of their in-scope risks on PPL or another e-placement platform from doing so.

The smaller brokers still prefer to come meet us at our box, they’ll say. We want to meet the Lloyd’s requirement for electronic placement each month, but it’s hard to persuade the brokers to follow suit.

This was the argument made by DL Dale Syndicate 2525’s active underwriter David Dale: smaller syndicates tend to work with smaller brokers, who don’t yet use PPL.

Forcing all brokers onto the e-placement bandwagon will fix this problem.

This is all good news for the market.

It’s surely the next logical step for smaller syndicates to benefit from some of the Corporation’s leverage when trying to change how brokers present them with business.

The move should help them compete on a level playing field with their larger counterparts when it comes driving digital take-up.

Post-broker mandate, the market-wide data on the usage of electronic placement platforms within Lloyd’s – published by the London Market Group and PPL – should make for fascinating reading.

Surely everyone will see their adoption rates shoot the lights out, surpassing the mandated requirement? If the target continues to increase by 10 percentage points a quarter, that’ll see the goal at 50 percent of in-scope risks by the middle of next year.

And those 10 syndicates that failed to meet the required 20 percent of in-scope risks being bound in September this year will surely have no excuse not to beat the target, right?

The good news is that the market’s never had more choice. PPL is no longer the only game in town – Whitespace, RuleBook, Guy Carpenter’s GCMP and Ed Broking’s TradEd platform have all received approval and now count towards digital placing stats.

Be under no illusion then: for both syndicates and brokers, there’s soon going to be nowhere to run, nowhere to hide from the new, highly digital marketplace.