LONDON, Feb 26 (Reuters) - Lloyd’s of London will pilot an electronic exchange to handle simple insurance risks this year, it said in a strategy update on Wednesday, as the 330-year old commercial insurance market seeks to modernise.
Lloyd’s, which started life in Edward Lloyd’s coffee house in 1686, is trying to become more efficient and cut costs as it competes with rival insurance centres such as Bermuda and Singapore.
It said last year it planned to launch two exchanges, one for simple and one for more complex insurance risks.
It said on Wednesday it had taken a 40% stake in an existing electronic placement system, PPL, which will form the basis of the complex risk exchange.
Lloyd’s said it had completed the transition phase of the strategy change and was moving into the first phase of delivery.
“We are now ready to start building the Future at Lloyd’s, having achieved three major objectives - securing finance, setting the governance structure and detailing the plan for the next 12 months and beyond,” Chief Executive John Neal said in a statement.
The Lloyd’s market is made up of 99 syndicate members and insures anything from ships to sculptures. Much of its business is carried out face-to-face in its City of London tower, with brokers and underwrites carrying papers around the building in briefcases or even suitcases.
Several insurance sources told Reuters they approved of the modernisation plans, though one said the exchange was trying to do too much too soon. Some smaller insurers and brokers are wary of being cut out of the new-look market.
Reporting by Carolyn Cohn. Editing by Jane Merriman