In the venerable Lloyd’s of London insurance market, numerous modernisation programmes have had little success. But under Shirine Khoury-Haq, who has been given responsibility for the latest modernisation initiative, that is changing fast. She has overcome widespread cynicism about its prospects by adeptly communicating the benefits of the digital transformation to the Lloyd’s board and to the market that finances the initiative as well as the looming threat of digital disruption. The typical question she fields from market participants is no longer ‘how are you going to make it different from past failures?’, but ‘how can I implement this in my organisation?’.
Chief operating officer
Lloyd’s of London
How are you influencing the products, customer experience and services your organisation offers to its customers?
I am the chief operating officer of Lloyd’s, and my remit is market operations, data, information technology and property services. I am responsible for driving forward modernisation across Lloyd’s and the wider London market as the sponsor of the London market target operating model (TOM) initiative.
Lloyd’s was founded in 1688 and is different to most organisations because it is a market comprising 57 insurance organisations. I work for the corporation of Lloyd’s, which exists to facilitate and optimise all aspects of this specialist insurance market, including the processes and technology shared by market participants that underpin day-to-day operations.
One of our key strategic objectives is market modernisation: we are working to make the Lloyd’s market as efficient and attractive as possible to both new and existing business in London and across the 200 countries where Lloyd’s operates We are modernising across the entire London (re)insurance market, which consists of approximately 350 Lloyd’s insurers and brokers and non-Lloyd’s insurers. This modernisation effort goes beyond an IT upgrade, and includes addressing our long-established culture, our working practices, our international reach and local relevance. We are improving the customer experience, and embracing new opportunities and efficiencies offered by technology.
A key part of this effort is the London market TOM, of which I am the sponsor. It is a £250m programme which involves 350 businesses and 48,000 professionals across the London insurance market. TOM’s objective is making the London market an easier place to do business, and it will deliver significant business benefits to our market participants.
The two principles at the heart of TOM are: first, one-touch data capture in a common, global digital format, with data is entered only once, on behalf of all insurance underwriters and brokers, reducing risk of error and costly re-entry in multiple formats; second, centralised administration of non-competitive services, allowing insurers and brokers to concentrate on their key business objectives.
As a sponsor, it is my role to get the different stakeholders – businesses with their own CEOs, CIOs and business/IT strategies – working in the same direction to modernise what we do. At times this means giving up what is in the best interests of an individual organisation for the good of the market as a whole.
Where many previous market modernisation efforts have failed, TOM is delivering on its promises to enable the London market to become more accessible, efficiently run and relevant to the needs of our customers. This is because the market has come together with a common vision, and key players in the market are actively engaged and leading the change.
Define the key business outcomes that you have delivered over the last 12 months and their impact on your organisation’s performance
Risks are moving around the market electronically for the first time. 2016 saw electronic placement of policies go live across multiple brokers and insurers for the first time ever in our market, and now several business classes are online, with adoption increasing steadily among insurance brokers and underwriters in the London market. 18 brokers and 71 underwriters are currently signed up to the platform, with over 2,000 users on the platform.
Money has started moving more swiftly through the market. Premiums are now passing electronically through central services. In December 2016 we delivered an online portal that allows brokers to send their premium transactions directly to the bureau, and claims will go live in early 2017. We have developed a truly collaborative cross-market partnership which has enabled us to deliver on our promises.
Progress is being made in helping the market speak the same language. Pilots for new common message standards and a market business glossary and collaboration project were launched. This brings us closer to our ambition of attaining straight-through processing and creating greater efficiencies for our customers.
Real progress has been made in making London more attractive to the coverholder community (businesses located all over the world which are authorised to write policies on behalf of Lloyd’s underwriters) by reducing the administrative burden of doing business with the London market. The co-ordination of 1,350 audits has been automated, covering 3,150 relationships, resulting in 1,500 fewer audits in 2017. We will also be delivering a centralised compliance solution in 2017 and are working on launching the first ever common data standards for the transmission of risk, claims and premium information between our 4,500 coverholders and the brokers/insurers that do business with them. This has the potential of eradicating hundreds of thousands of spreadsheets as well as the associated manual reconciliations and data entry.
What has been your involvement with innovation at your organisation – in particular, with products, business model and technology – over the last 12 months?
The Lloyd’s corporation continually encourages market participants to continue to innovate in the development of new insurance products. Underpinning that effort, I have set up a dedicated data lab to explore and harness the power of big data to enhance underwriting expertise and ensure new products are better aligned to the needs of our customers.
Our data lab organised our first datathon, where 50 data scientists, actuaries, business analysts and senior executives from across the Lloyd’s insurance market met to ‘hack’ four business challenges – an important step in opening up the depth, breadth and quality of the data assets already available to the Lloyd’s market. This was a very popular event and we will be running future events at the market’s request.
We regularly engage with the fintech and the insurtech players to bring new ideas to the issues we are trying to solve, and the TOM innovation research and development team continues to explore developments which might affect how the market works in the future.
For instance, TOM has delivered three blockchain proofs of concept to provide better information about how the technology works and identify potential applications in the market. It has also sponsored a study into the potential application of smart contracts in the London wholesale insurance market in order to streamline processing, slash costs, improve the client experience, reduce risk and deliver new products.
TOM has also sponsored SpeedTech events designed to inform the London market about technologies that are having an increasing impact on the insurance space including data, robotics and the internet of things. Practitioners were given a platform to learn directly from the experts about certain new technologies, and discuss the topics shaping the future of the insurance market.
How have you delivered cultural and behavioural change as a CIO within the IT department and/or more broadly across the organisation?
In order to deliver the transformational change we are pursuing with our market modernisation programme, we have had to address the culture within the market. Getting the foundations right is critical to delivering this project, and we worked hard with market participants not only to convince them to automate processes, but to provide the funding required to run such an ambitious programme. In the early days, we had over 100 meetings with the executive committees and main boards of many Lloyd’s insurers and brokers and Lloyd’s competitors to communicate the vision, and very importantly to obtain and incorporate their feedback.
We have worked with the organisations, leaders and associations in our market to deliver a concerted effort of engagement and communications, where we talked to the market, answered their questions and did our best to address their concerns. We engage with thousands of market practitioners, technology providers and service partners every single month. It has been a challenging but rewarding effort. While in the first year of the programme the question from market participants was ‘how are you going to make it different from past failures?’, now the question is ‘how can I implement this in my organisation?’. In this long-established and conservative market where many large modernisation programmes have failed, this is a huge step forward.
How have you worked with your CEO and/or board to communicate whatever ‘digital’ and IT means to your organisation/sector and improve digital literacy at the highest levels of the organisation?
The London market insurance industry is a relatively late adopter of modern technology. Numerous modernisation programmes have made little progress and there was cynicism both within Lloyd’s and the market about whether the TOM could be delivered. As the primary sponsor for the TOM within Lloyd’s, my role includes communicating the benefits of digital transformation to the Lloyd’s board and to the market that finances the initiative. There is now far greater understanding at board level throughout the market both of the threats of digital disruption and the efficiency and customer service benefits offered by digital modernisation.
We achieved this early on by holding 117 meetings with businesses CIOs, COOs and technology boards, and 28 events for 1,260 market participants to explain how the modernisation programme would work and to get their views. This communication and engagement continues actively throughout the programme.
How have you worked with the technology and IT vendor market to achieve your business goals? How have you been able to influence IT suppliers and successfully manage your partnerships/relationships with large IT companies, SMEs and startups?
Through our modernisation programme we have worked with hundreds of IT vendors. We opened up the TOM blueprint for consultation and asked for a wide range of contributions. This ensured that we benefited from reviews and inputs from a wide range of stakeholders – 130 vendors attended our events, we received 160 submissions, and 608 ideas were catalogued. When the time came to select vendors, we went beyond our usual contacts and engaged established IT businesses and insurtech/fintech companies to get the broadest possible contributions and solutions.
How have you tried to develop the diversity of your team?
Talent is a key strategic priority for Lloyd’s and we have formed a partnership with the Lloyd’s market – [email protected]’s – to embrace and embed diversity by widening perspectives and sharing best practice (http://www.lloyds.com/lloyds/corporate-responsibility/diversity).
[email protected]’s has a five-year roadmap and has enrolled a significant (and growing) proportion of market firms in its diversity and inclusion (D&I) charter. To complement this guidance, it has launched practical initiatives for D&I awareness raising, sharing best practice and promoting role models. These include Dive In – a global festival of diversity and inclusion in insurance – the publication of a practical D&I five-step guide, market-wide research and report on D&I initiatives and practices called Holding up the Mirror, and a D&I scorecard template offering guidance on measuring and reporting D&I progress.
As a member of the Lloyd’s executive team, I support all aspects of our diversity and inclusion programme, but I personally sponsor the cultural awareness diversity initiative. In my day-to-day work, I ensure that we have considered a diverse range of candidates when we hire, and if we do not hire those in minority groups I ask why to ensure that we have behaved equitably.
Within the IT team, the head of infrastructure operations leads an organisation-wide workability group focused on ensuring the working environment within Lloyd’s is as accessible as possible to individuals with special requirements.
Describe how you organise and operate IT and how this aligns effectively with business strategy and operations
With the digitisation of services, the global commercial insurance sector is one of the few industries that has not yet been disrupted on a significant scale, although we are starting to see this coming through on consumer lines.
For Lloyd’s, our future success depends on how we deal with the changes and challenges before us right now. The insurance sector must modernise if it wants to keep pace with the rapidly changing world.
This is what underpins our technology efforts. We have set out a vision of what the future could look like, and worked in partnership with the market, the market associations and internal stakeholders to deliver a market that is global, customer-focused and easy to do business with.
What strategic technology deals have you made in the last year and who are your main suppliers and IT partners?
Through our modernisation programme we have made deals with a wide range of technology partners, from established brands to insurtech/fintech businesses. This ensures that we can count on a wide range of solutions to support our efforts. The main suppliers of IT at Lloyd’s are Microsoft, Logicalis for HP and Cisco kit, Dell, SAS, BSC and Aqueduct, among others.
What are your key strategic aims for next year?
The strategic aims of our modernisation programme will remain throughout 2017: making the London market (and Lloyd’s within it) an easier place to do business. Key milestones for 2017 include:
- All the build work to move money more swiftly and effectively around the market will be completed.
- The core data services will be live and rolled out, creating a single central repository for all coverholder data.
- Structured data capture will be launched so that we can open the door for straight-through processing.
- New and enhanced global message standards will be launched.
- More risks of different kinds will start to be traded electronically.
We will be driving efficiencies and reducing the cost of IT services through strategic investment planning and right-sourcing. We will also be maximising the value of technology investments by choosing unified and integrated technology platforms.
Within Lloyd’s we continue our work on our internal operating model and the related IT strategy as well as continued effort on upgrades, security, regulation, etc.
How are you preparing for any impacts Brexit might have on your organisation?
Lloyd’s has established a central team to analyse the potential impact of Brexit on the corporation and the wider insurance market. This team is analysing the options for maintaining and growing EU business post-Brexit, which could include setting up a subsidiary or company model in mainland Europe should mutual market access not meet our needs. We are currently developing our plans and consulting with the market before a decision is made.
When did you start your current role?
What is your reporting line?
Direct report to the CEO, Dame Inga Beale.
Are you a member of the executive leadership?
Are you a member of the board of directors?
What other emerging roles does your organisation have and what is their relationship to you?
Lloyd’s also employs an interim chief technology officer who is working with our CIO to develop a new IT strategy. Lloyd’s operates a data lab function headed by a chief data officer. They are all direct reports working within the operations senior leadership team. We have also recently appointed a head of innovation to build on our existing thought-leadership work such as the City Risk Index.
How often do you meet with your organisation’s CEO or equivalent?
How many people at your organisation does your function supply services to?
1,237 Lloyd’s corporation employees and 48,000 London market participants.
What is your annual IT budget, or your spend as a proportion of the organisation’s revenue?
The Lloyd’s IT budget is £28.5m. The TOM modernisation programme has a budget of £250m in total, which our steering board prioritises and calls off each year.
What percentage of your budget is operational spend (ie keeping the lights on) and how much new development (ie innovation, R&D, exploratory IT)?
At Lloyd’s 60% of spend is attributable to BAU, 40% of spend is attributable to new developments.
Rank the following sources of advice/information in order of importance:
- CIO peers
- Industry bodies
- Analyst houses
Has your organisation detected a cyber intrusion in the last 12 months?
Are you expecting an increase in budget specific to security in order to tackle the cyber threat?
Does your organisation have a designated security professional – CISO or otherwise – and what is their relationship to you?
Lloyd’s has a dedicated IT security team which reports to the CIO.
Lloyds of London IT department
Are you finding it difficult to recruit the talent you need to drive transformation?
Has recruitment and retention risen up your agenda as a CIO?
Does your IT organisation operate an apprenticeship scheme?
How many employees are there in your IT team?
135 at Lloyd’s, plus 55 on the TOM. The TOM figure does not include the many IT service providers and market participants that work on our projects.
Are you increasing your headcount or planning to bring skills and the ability to react to needs in-house?
Which technologies or areas are you expecting to be investing in over the next year?
- data analytics/business intelligence
- enterprise applications
- machine learning/artificial intelligence
- devices (mobile)
- devices (desktop)
Which technologies or areas are you expecting to be investing in over the next one to three years?
- data analytics/business intelligence
- enterprise applications
- machine learning/artificial intelligence
- devices (mobile)
- devices (desktop)
What emerging technologies are you investigating or expect to have a big impact on your sector or organisation?
Artificial intelligence (AI) and robotics are expected to have a big impact on the insurance industry. Research shows that ‘insurance underwriter’ is one of the five jobs most at risk of being replaced by robots.
AI as a new risk is an interesting area which requires the insurance industry to adapt and innovate to provide the right products, and also determine liability.
We can see that the demand for robotics has accelerated considerably, due to an ongoing trend toward automation and the continued advance of robot technology, so we in the insurance industry needs to get our arms around it.
Does your organisation do a significant amount of trade with the EU?
Does your department include technology staff from the EU?
Are you or have you been looking to the EU to recruit key skills?