Lloyd’s Blueprint could slash costs from 40 to 30 percent: Peel Hunt

The Corporation of Lloyd’s has estimated that the digitisation and simplification of the Lloyd’s Market, via its Blueprint, could reduce the cost of doing business from the current high 40 percent of premiums down to 30 percent.

This is according to a report from independent corporate broking, advisory and trading house Peel Hunt.

The corporation, which manages the insurance market and will execute the strategic Blueprint, is reported to predict that the rollout of the insurance risk exchange for commoditised products (which accounts for about 50 percent of premium volumes) could lower this cost further to 25 percent.

The report said that in 2018, the normalised combined ratio of the market was 102 percent, indicating that the market was generating an underwriting loss. While the first half results for 2019 showed just a small improvement to 99 percent. Peel Hunt said “as such there is a real incentive to make the strategic Blueprint work”.

It said that the 10 percent-point decline in the cost of doing business would be a material benefit albeit part of this will be passed on to customers as the market aims to become more competitive.

The market has also reiterated its ongoing focus on underwriting discipline after the successful drive to rein in underperforming syndicates and underwriting classes with its Decile 10 initiative. The broker said this had “pushed up rates by 3.9 percent during H1 2019 and should underpin rates going into 2020”.

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