Another Lloyd's Survey

Lloyd's recently released the results of its annual survey of its underwriters citing their concerns for the upcoming year, see my comments here.

Today I read about a survey measuring satisfaction with Lloyd's as related by 506 brokers, reinsureds, insureds and coverholders. The results are on page 3 of the .pdf document found here - overall satisfaction increased from 7.6 out of 10 to 7.8.

It's noteworthy that the results show good scores for turnaround speed in all areas except contract documentation and staying informed during a claim - noteworthy because these are the most important to the client. The reform agenda is working to improve these areas with contract certainty and electronic processing of claims.

The case is made that there is an uptick in overall satisfaction which can be attributed to the gains made in modernizing the processing of policies at Lloyd's. I support the assumption because of the significant progress made in processing accounting messages and claims online instead of by paper.

To evidence this progress, see the story on the same page which cites the Market Reform Group's report that 70% of accounting messages and 92% of claims are now processed online.

In terms of the impact this reform is having on brokers, one of the big 3 brokers uses ACORD messaging (the Web Connectivity gateway) and told me this week that the ROI from online processing of accounting and claims is already being felt in their bottom line.

U23D

This is not some new fashion faux pas, Sarah & I saw a concert movie last night - shot in 3D and shown in a London IMAX theater.

U23D is the first movie of its kind, the technology is simply unreal and we both loved it (we both happen to be big fans of the band).

Brokers & Cycle Management

My earlier post (here) talked about risk managers reacting to the furious soft market (isn't there a term for an modifying adjective that contradicts the object and is my grandmother rolling over in her grave to get her ruler to rap my knuckles?).

See images of the soft market above - the first is rates for Directors & Offices (D&O) cover showing 4 years of declining premiums. The second is the rate of change for every quarter in the past 4 years - note that the 11% decline in Q4 2007 is the 2nd biggest in these 4 years - meaning the soft market is showing no signs of abating.

I have posted many times now about underwriters managing the cycle through "underwriting discipline" (see here and here and here).

In looking at developments in the broker market, Jardine Lloyd Thompson's (JLT) results today (here) showed top-line and bottom-line growth. This is noteworthy because most brokers fees are a percentage of premium and as the soft market erodes premium, the broker looks for other ways to grow. JLT did a lot of right-sizing to achieve these profits.

What are brokers doing?

The COO of a London market broker told me he'd taken out all of the cost he could and growth would need to come from new revenues. His Board was looking at consulting services to provide clients wth even greater advice in enterprise risk management.

Going back to JLT, our friends at the Insurance Insider wrote (here) that they felt JLT and competitor Thompson Heath and Bond (THB) were looking for new revenue by launching underwriting divisions. See press releases for JLT here and THB here.

It's going to be very interesting to follow these developing stories - will Thistle Underwriters (JLT) and Unicorn Underwriting (THB) be soft-market panaceas or more disruptive innovations for the industry. Advisen Front Page News will follow this story - subscribe here.

Cycle Management

Financial Week published a great article (here) about the soft market and declining commercial insurance prices, citing research by Advisen and the RIMS Benchmark Survey and a quote from Dave Bradford, Advisen's Chief Knowledge Officer.

The article is written with buyers of insurance in mind and is a thoughtful explanation of the forces at play that are driving lower pricing namely the lack of losses such as storms and other catastrophers as well increased competition to take a slice of the profits that the insurance industry has generated each of the past 2 years.

I noted that Aon has responded (here) to Advisen's research on D&O rates for banks and other financial institutions impacted by the subprime crisis.

For all my posts about insurance pricing see here and to learn how Advisen benchmarking of limits and rates can help show insurance pricing by industry, by type of company, by coverage type, please call +1.212.897.4820 in the US or +44(0)20 7929 6929 in London.