Last week, Lloyd’s announced its roadmap for the wider market adoption of Delegated Data Manager (DDM), its central bordereaux management solution for the London Market. Here we summarise the ‘need to know’ information and the future impacts it will bring.
The importance of delegated authority business
The mandated adoption of DDM as a central reporting tool seems to be the next steps to the wider vision at Lloyd’s. Delegated authority business, accounting for almost 40% of Lloyd’s premium, transacted by a network of over 4,000 registered coverholders and 350 plus service companies from across the globe, this shift in requirements is sure to make an impact.
But what exactly are the goals of the roadmap?
Paving the way to introduce the Conditions of Trade for all binders as of 1st January 2023, the end goal is to achieve full DDM adoption by the end of 2022 for all binding authorities, in order to capture and transmit “consistent and high-quality data”.
“This will significantly reduce the cost of managing data for all market participants, accelerate data flow and the faster movement of money as well as reduce error resolution through improved data quality. This will be achieved through defined data standards, rigorous data validation and business controls on all submissions to DDM,” said Lloyd’s. The roadmap recognises that firms will adopt DDM progressively, rather than moving all contracts at once. It therefore encourages firms to consider adoption of DDM “in a manner that delivers most value to them”.
“Each firm in the market has a unique business profile, technology environment and role in the distribution chain. Therefore, the optimal timing and approach for adopting DDM will differ across the market and is best agreed by the participants on each delegated authority arrangement,” announced Lloyd’s.
In the months ahead, the roadmap aims to increase the benefits of using DDM for firms by “reducing friction in the process”.
Therefore, the inception date of 1st January 2023 for the Conditions of Trade is dependent upon three main factors –
- Successful integration of DDM with the Delegated Contract and Oversight Manager (DCOM) to reduce the need for dual data processing
- Enhancing Coverholder Reporting Standards
- Automating bureau and bordereaux submissions
The above three goals are all designed to reduce friction and increase efficiency Lloyd’s said and must be met by the 1st of July 2022.
Initial focus on Premium and Claims data for regulatory and tax purposes only
Lloyd’s will release enhanced guidance on Coverholder Reporting Standards V5.2 for Premium and Claims data in June this year. “This will provide clear and defined guidance on the mandatory requirements for premium and claims bordereaux standards, to support Tax and Regulatory reporting,” Lloyd’s says.
Lloyd’s planned portal for bordereau submissions
As part of the roadmap, Lloyd’s is developing a portal to automate the submission of bordereaux data from brokers, managing agents, coverholders, and delegated claims administrators.
“Initially this will take the form of a message-based data exchange, to be trialled in the second half of 2021, with APIs being developed in the future”, said Lloyd’s.
What should the market do now?
Lloyd’s guidance is clear: coverholders, brokers and carriers are encouraged to start using DDM as soon as is practical. They also encourage all participants in the delegated authority space to discuss the adoption of DDM, plan the approach and agree, at the point of signing or renewing binder contracts, who will be responsible for submitting data as a way forward.
“We will continue to work in partnership with the market to build out these plans over the coming months, providing regular updates through the DDM user group and market association committees,” Lloyd’s says.
At present, Lloyd’s is not being prescriptive about who submits the data. However, the announcement strongly hints that they would prefer brokers to do so in future.
“For now, we recommend that brokers speak to their technology partners to discuss the implications of this and seek guidance”, said Lloyd’s.
The view at VIPR
At VIPR, we welcome this announcement, as it recognises the need for phased adoption which respects brokers’ and carriers’ individual needs.
We also welcome Lloyd’s plans to focus on the market’s regulatory and tax data requirements. This will deliver an important service to the market, whilst allowing brokers and carriers the flexibility to partner with their chosen vendors to satisfy their broader needs. This will encourage competition and innovation amongst these vendors, which we believe is one of the key ingredients in transforming the Lloyd’s market.