Lloyd’s of London — the largest single marketplace for marine insurance — has been brainstorming how it can remodel its vast underwriting room when business returns after the Covid-19 pandemic.
It has set up a virtual crowdsourcing consultation to ask brokers and underwriters for ideas about how they want to work in the future.
It comes after a near year-long closure has demonstrated that two parties no longer need to meet to do business on the floor of the iconic Lime Street building.
It seems the process of brokers collecting bids, and agreeing syndicated insurance terms with underwriters, for, say, the hull of a ship, can be done just as effectively online.
When the Lloyd’s building reopened last summer, after the UK’s first national lockdown, with a virtual underwriting room and full social distancing, it got a lukewarm reception from underwriters.
Most preferred to continue to work from home. But Lloyd’s has insisted that it wants to extend the lease of the building, which expires this year.
Chief executive John Neal said: “There’s no reason why we can’t re-engineer the space to be fit for purpose.”
The rethink on the underwriting floor is also being seen by management as a chance to shake off the old image of Lloyd’s, which started in a coffee shop in 1688, to become associated with a more futuristic way of working for the City of London.
It has found it difficult to ditch a reputation for being stuck in the past and, even before the lockdown, it was the subject of unsavoury headlines of sexual discrimination and harassment.
But just what will the crowd-sourcing and virtual fireside chats come up with? Judging by marine broking sources, it is split into two distinct camps.
One of the more traditional Lloyd’s marine broker told TradeWinds: “OK, the pandemic has proved you don’t need the underwriting floor any more.
“But most of the people I know can’t wait to get back to it. The brokers and underwriters that work in the marine sector have people skills. Getting together and talking through deals is what they do well.
“I’m worried that because hull insurance is a commoditised business it can be handled through digital process. But for most of the people working at Lloyd’s, sitting in a virtual room and fixing deals by clicking a mouse is not what they signed up for.”
Then there are those who are ready to embrace technology.
Advances such as virtual reality goggles, through which negotiations can take place, offer the opportunity to use deal-making skills without having to meet. It is a sort of hybrid solution that seems to be gathering most traction at Lloyd’s.
“The Lloyd’s of the future must embrace technology and become a fusion between a physical market space and a virtual one,” another marine broker said.
“This is the chance to innovate by creating a new market which hopefully still bears strong personal features and physical meetings but which, at the same time, can shift seamlessly into virtual mode if need be.”
Ditching the trading floor also offers the opportunity to dramatically cut Lloyd’s notoriously high costs to make it more competitive.
“The cost of maintaining a physical presence within Lloyd’s and a full-blown office is too high and puts the City [of London] into a disadvantage when compared to other insurance market hubs,” the broker said.
The outcome of Lloyd’s deliberations will be closely watched by other marine services, such as legal, classification and shipbroking, to see if it can offer any insights into how they might operate.
But if Lloyd’s is to lose its underwriting floor, what will become of it? Planners are already working on schemes to develop potentially acres of redundant office space in the City into nightclubs and restaurants.
The postmodern design of the Lloyd’s building might lend itself perfectly to such a venture. Or, as some commentators have suggested, it could always revert to being a coffee shop.