Modernizing the London Market

By Tyler Cichewicz

Roughly a year after the London Market Target Operating Model (TOM) was announced, details about the plan to modernize and keep the London Market competitive was explained by Shirine Khoury-Haq to an audience at the London Market Group Forum. Khoury-Haq is Lloyd’s of London’s Director of Operations and TOM sponsor at the London Market Group.

Simply put TOM attempts to digitize the platform and connection of the London Market by streamlining processing and communication. The new system is designed to unite the chain of distribution from ‘buyer to broker to insurer’ and make doing business in the London Market easier locally and globally.

“Our overriding mission is to make the market highly accessible, efficient and relevant to the needs of our customers,” Khoury-Haq says. “We want to deliver simplicity and reduce the cost of doing business.”

Previous attempts to modernize Lloyds have failed because those efforts were too isolated and did not establish themselves across the market. The TOM contrasts these past attempts with a slower integration into business.

“Two central objectives are at the core of the TOM. The first is a universal way to input data on behalf of all carriers and brokers to reduce risk and costly reentry. The second is a centralized administration and non-competitive services, which allow insurers and brokers to concentrate on their key business tasks.”

“We know why they [past attempts] have failed…because the market never acted together before,” Khoury- Haq says.

TOM recognizes the common risks that face any change to a system. There is a risk that new efforts will fail, exasperate the problem by handicapping the way business is already done, and waste significant amounts of time and funds. However, the TOM is not expected to be installed overnight, but to be integrated in with different types of coverage.

“The reason we are spending so much time and effort on modernization boils down to this,” Khoury-Haq says, “We all are working to safeguard our future.”

Two central objectives are at the core of the TOM. The first is a universal way to input data on behalf of all carriers and brokers to reduce risk and costly re-entry. The second is a centralized administration and non-competitive services, which allow insurers and brokers to concentrate on their key business tasks.

Khoury-Haq stresses that the challenge is not building the system rather that it will be adopted by the market, which has proved difficult in past attempts to modernize the world’s oldest insurance market.

“Any further process model should support both face-to-face and entirely electronic trading,” Khoury- Haq says, “It should aim to deliver benefit to all practitioner firms; and it must be aimed at preserving the benefits that a subscription market delivers.”

For a market that has done business face-to-face and on paper for over 300 years, it seems natural that change within the London Market may be met with dissonance. However, those behind the development of the TOM are aware of this and seem cautious in their approach to the TOM as a tool to be more effective, as opposed to a new way of doing business.

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