The spread of Covid-19 brought our typical London market working arrangements to an abrupt halt in March this year. Organisations and employees around the world had to make quick and significant changes to their operations. Below we discuss how Miller’s Marine Liability team have adapted to these changes and what it could mean for future ways of working.
From face-to-face to online negotiation and placement
In our previous bulletin, we mentioned that Lloyd’s of London closed its underwriting room on 19 March, putting a stop to face-to-face negotiations.
Prior to this, the vast majority of interactions between market underwriters and brokers was conducted in person, either at Lloyd’s or respective offices. Whilst there had of course been instances where due to travel, timing or availability, brokers and underwriters had worked together quoting and binding business over phone or email, this exception has now become the norm.
Launched in 2016, Lloyd’s electronic placing platform - Placing Platform Limited (PPL) - has since been rolled out to almost every risk class and is now used by around 160 carriers and 165 broking firms to supplement face-to-face transactions. The recent move from business being conducted predominantly within the City of London to online has therefore helped to accelerate Lloyd’s drive to modernise and increase efficiency through the use of technology.
Over the past few months, we have successfully placed a number of large and complex renewals, as well as new business using this online trading platform. This provides placement and contract certainty in lieu of obtaining the underwriters “wet stamp” at the box or their offices.
BFH – Broking from home
As London market brokers, transacting business face-to-face has dominated the way we operate, up until now that is. The complex nature of marine liability requires nuanced discussion of each individual risk, as opposed to a more transactional approach taken by other areas of the market, which naturally lends itself better to electronic and process driven risk placement. Accordingly, we had to make a number of adjustments to our broking methods to ensure we maintained the best possible service and terms for our clients.
The first hurdle was not being able to physically meet with underwriters and clients, whether in London or whilst travelling. At Miller, our IT infrastructure and systems already enabled us to work remotely and “paperlessly”. As such, all employees were able to effectively work from home from day one of the lockdown. This allowed us to adapt to the situation quickly and ensure that there was no impact to our service.
Throughout Q2, our contact with clients and negotiations with markets has been conducted using a range of video conferencing software and telephone calls. These tools have allowed us to keep in touch with clients around the world and in many cases, enabled multiple offices to join meetings that might otherwise have been impossible if these had been conducted in person. Certainly an advantage of the new way of working that we will hope to carry forward.
Whilst these methods of communication have worked well overall, they have also highlighted some of the challenges we currently face. The majority of negotiations are now taking place in underwriters’ inboxes and there is the potential that what may have been a quick conversation at the box in Lloyd’s can turn into a prolonged discussion over email. We are combatting this “inbox underwriting” by trying to replicate the Lloyd’s broking experience as closely as possible, phoning underwriters to give the same broke we would have face-to-face and following up over email. We continue to monitor underwriter response times throughout this period and work to keep them down. Conversely, however, we have also found that in some cases underwriters are more available as ‘broking time’ is not restricted to box hours in Lloyd’s and there is less business travel.
Remote working has coincided with the hardening of the marine market, seemingly making it easier for underwriters to pushback on terms and rating, or decline risks that are outside of their core business appetite. We have heard anecdotally that underwriters find it easier to say no over email than in person. Our deep understanding of the original risk, expert knowledge and market relationships means that we are well positioned to discuss and negotiate with strong, sound arguments on our clients’ behalf. This allows us to correctly present your risks and the exposures they bring and challenge underwriters in their view from afar, just as much as if we were sat in front of them in Lloyd’s. As such, we have been able to resist this change in approach from underwriters. In this environment, the quality and completeness of submissions to the market has become even more critical and so the more information you are able to provide for new or renewal business, the better we can negotiate on your behalf.
What does the future look like?
When we return to our Mark Lane office, it is likely that at least in the short term, things will still look very different to how they did before we left our desks in March, with fewer desks and rota based office visits being amongst management plans. Agile working will almost certainly become more commonplace, with the hope that we balance the positives of both remote working and being in the office. Miller already operates a flexible working policy, offering employees the opportunity to change their working hours, location and working pattern. The current situation has allowed us to build on and improve what was already in place.
The latest update from Lloyd’s is that the underwriting room will re-open from 1 September 2020, but at a reduced capacity of 45% and with new safety measures in place. The use of the underwriting room after re-opening will largely depend on when and in what capacity individual carrier and broking firms bring their employees back to the City of London.
It may be some time, if at all, until trading in Lloyd’s resumes as it did before. However, what is certain, is that broking during lockdown has shown that we can successfully negotiate and place complex risks on your behalf, whether working with markets face-to-face or virtually.
We look forward to when we can safely see you again, hopefully in the not too distant future.