Catex


SOFTWARE OPPORTUNITIES AT LLOYD’S


The Lloyd’s Three-Year Plan 2012–2014 is designed to make the market more effi cient and streamlined, and will also mean many opportunities for software providers, says Francis Fortunato.


E


stimates suggest that the percentage of delegated authority business underwritten by Lloyd’s syndicates nears a third of the overall total gross written premium (GWP) in the market.


In fact, the figure is closer to 25 percent—still a hefty portion of the approximately $34 billion in GWP at Lloyd’s.


Underwriters and syndicate management have begun to see the fruits


of the seeds prudently planted over a year ago when guidelines were announced that binding authority data needed to be standardised and reported in a timely manner. Slowly but surely, a clearer picture is beginning to emerge about the validity of the premiums charged for covering these risks. As more data become available, in a far faster time frame, underwriters can do what they do best and price risks appropriately.


A number of software providers, CATEX included, are offering


bordereau reporting systems. Syndicates, coverholders and binding brokers have a good choice of options available to comply with the Lloyd’s guidelines. The software and underwriting markets seem to have responded to the challenge.


A good start has been made but there remains much work to be


done. Many underwriters are continuing to struggle with spreadsheet management for reporting purposes and the condition of many of the reporting methods of their coverholders is even more primitive. A road map for complying with the reporting needs now exists and everyone needs to follow it.


WHAT NEXT? The Lloyd’s Three-Year Plan 2012–2014 includes some tantalising


clues for what may be just over the horizon. The plan makes no secret of Lloyd’s intent to provide managing agents with a choice as to whether to


56 | INTELLIGENT INSURER | Spring 2012


perform more “non-core activities” in-house or contract with competing third party suppliers, including Xchanging.


What exactly are the activities that Lloyd’s views as “non-core”?


The definition of what are “core activities” is offered in the Three- Year Plan as “those which reduce cost and improve market efficiency; are needed because of tax or regulatory requirements; or are services which reduce risk”.


While this definition is not detailed to the lowest level it is widely


interpreted to mean those services that are essential to maintain tax and regulatory requirements across the 60 or so jurisdictions in which Lloyd’s is licensed to trade, and where it is more efficient and less risky to provide those services centrally.


CATEX is one of those third party suppliers looking to contract with


managing agents to perform “non-core activities”, so the distinctions in the “core activity” definition are of considerable interest.


Few licensors of systems would claim that their products do not


reduce cost or improve efficiency. So, too, would few system developers claim their systems do not reduce risk. And finally the need to meet regulatory requirements can just as easily be stated as the raison d’être for many third party supplier systems, including our own Bordereau/ Program Management & Reporting System.


As a third party supplier, with a potential market base confined to


what is defined by the Three-Year Plan as restricted to the “non- core activities” of managing general agents, we do not see this being a barrier to our products. In fact since we believe the detailed definition of “core activities” is likely to be rather narrow, and our systems do help meet regulatory requirements; reduce costs, improve efficiencies; and reduce risk, they can contribute to the host of “non-


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