The underwriting room at Lloyd’s of London. The insurance marketplace is creating a virtual version to support remote working © Bloomberg

Lloyd’s of London has put out a firm estimate for cost savings for the first time as the 334-year-old insurance marketplace launches the latest stage of its turnround.

The marketplace, where brokers and underwriters meet to buy and sell commercial policies, has been restructuring under chief executive John Neal after the companies that operate there complained that the cost of doing business was too high.

Lloyd’s said on Thursday that it would cut operating costs for brokers and underwriters by £800m, or about 3 per cent of the total, within the next two years by reducing bureaucracy and increasing automation.

Jen Rigby, Lloyd’s chief operating officer, said that the plans would “deliver truly revolutionary change for the market, ensuring the future of the Lloyd’s market is digital from start to finish, with data at its core”.

The project — known as Blueprint Two — involves making it easier for customers to buy policies and make claims, and also improving some of the market’s back-office processes.

“We can remove a lot of the to-ing and fro-ing and inefficiency which happens at the moment,” Ms Rigby said.

The first stage of the revamp, Blueprint One, was launched in September last year. Since then Lloyd’s says it has cut costs by reducing the need for several people to enter the same data on to different systems and used a new, streamlined process to allow the launch of several new underwriting businesses.

Lloyd’s efforts to reform itself have been given fresh urgency by the coronavirus pandemic. The market has traditionally operated on a face-to-face basis, with brokers and insurers meeting in the underwriting room in Lime Street in the City of London.

But lockdown forced Lloyd’s to shift quickly to a remote model. It is creating a “virtual underwriting room” that will allow people to work together remotely in the same way that they would if they were face to face. Some companies are already using it, while others are likely to join in the next few months.

Chairman Bruce Carnegie-Brown said: “The pandemic has demonstrated that Lloyd’s can adapt in a fast-changing environment and this has only increased our hunger to get on and make further change happen.”

Simon Matson, chief executive of Gallagher’s UK insurance broking and underwriting business, said that Blueprint Two was an “ambitious set of plans”.

“Relationships and personal networks remain a big part of doing business effectively in London,” he added. “If we can find a balance between harnessing the value of these relationships and [digitising], this evolution of Lloyd’s will result in a model that will reinforce why business should come to London.”

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