Lloyd's stakeholders call for "renewed commitment" to Blueprint Two delivery

By Aidan Gregory

Jan 24 - (The Insurer) - Lloyd’s must be resolute in its commitment to the successful delivery of the long-delayed Blueprint Two modernisation process despite the looming departure of Lloyd’s CEO John Neal, the scheme's key architect, according to key London market stakeholders.

Neal, who was appointed in 2018, will step down as Lloyd’s of London CEO in 2025 and join Aon as global chairman of climate solutions and global CEO of reinsurance.

One of the key planks of Neal’s tenure as Lloyd’s chief has been presiding over the progression of Blueprint Two, the market's long-delayed tech modernisation process intended to digitise and simplify the exchange’s legacy IT systems.

Blueprint Two was born out of ehe Future at Lloyd’s prospectus in 2019 and is the latest in a long series of promised technological overhauls of the exchange going all the way back to the 1990s.

“As a community we are absolutely committed to Blueprint Two being seen through to its conclusion,” said Christopher Croft, CEO of the London & International Insurance Brokers’ Association, in an interview with The Insurer. “The last thing we need is a new Lloyd’s CEO being appointed, deciding that they don’t want to pursue it and bringing in more consultants to look at the digitisation of the market, who will then conclude that we need to do all of the same things.”

While progress has been made during Neal’s tenure, Blueprint Two has been repeatedly delayed, causing frustration among market participations about the slow pace and cost of the scheme’s rollout.

The scheme's implementation is still seen as an absolute must for Lloyd’s, and the issue will remain at the top of agenda for the exchange’s new CEO when they are installed.

“I am really clear that the Lloyd’s marketplace has to push on and deliver the successful rollout of Blueprint Two,” Sheila Cameron, CEO of the Lloyd’s Market Association (LMA), told this publication.

“The Lloyd’s marketplace has to deliver on this programme. The infrastructure we have got within Velonetic is over 50 years old. It doesn’t matter who the CEO of Lloyd’s is – we still have to upgrade that infrastructure.”

For now, it appears to be business as usual. Lloyd’s told The Insurer that the leadership changes will have no effect on the exchange’s commitment to successfully delivering on the rollout of Blueprint Two, which will hopefully commence testing in 2025, which is being managed Velonotic.

“At the moment, we don’t have an update per se because we don’t have expect it to have an impact,” said a spokesperson for the Corporation.

Modernisation challenges

Blueprint Two is the latest in a series of modernisation initiatives at Lloyd's, with efforts to streamline Lloyd's business practices now stretching back more than three decades. Previous attempts at upgrades such as Kinnect (under then CEO Nick Prettejohn in the early 2000s) and the Target Operating Model (under Neal's predecessor Inga Beale) have all proved costly failures.

Neal first unveiled his Future at Lloyd's prospectus on 1 May 2019, which was followed on 30 September that year by the more detailed Blueprint One. The following year this was updated to what was hoped would be a more deliverable Blueprint Two, with the focus on end-to-end digital processing of risk data through a digital gateway as an irrefutable version of truth, along with placing standards, a tax calculator and compliance checking.

Following delays in the testing phase of the project, Lloyd's COO Bob James was named CEO of Velonetic, the joint venture set up to deliver on the initiative. James' role is expected to bring continuity to the delivery when Neal departs for Aon.

Regardless of who leads Lloyd's, Cameron said operational resilience requirements mean Blueprint Two must be delivered.

“We have an operational resilience regulatory requirement which means the upgrade has to take place, so we still need to push on and deliver Blueprint Two, in particular the upgrade within Velonotic," she said.

“This infrastructure serves over 400 firms and moves £115bn [$144bn] of premium and claims a year, through 62 million digital messages that move the money around," said Cameron. "That gives people a view of the scale involved and the complexity involved. It is not an easy programme to deliver, but we have a regulatory imperative."

Croft said it was important to be "resolute as a market and get it done".

“Blueprint Two isn’t the first attempt to resolve some of the issues and we have got a lot further this time than we ever have done before, and we are within sight of the finishing post,” he said.

“It has not been as fast as people have hoped, but how realistic people’s hopes were, you might question – because there is a reason why the systems at the core of Blueprint Two haven’t been replaced for 40 years, as they’re really complex,” said Croft. “It’s very complicated to replace them. The consequences of doing it and it going wrong are quite unimaginable if they start sending the wrong amounts of money to the wrong people, so it’s very complicated. If you look at the size of the development team, it’s a vast programme and probably bigger than any individual firm has ever taken on.”

Croft added that the a “renewed commitment” to delivering Blueprint Two was top of the wishlist from Lloyd’s new CEO when they are appointed.

“The market has survived for 350 years without this, and will survive for a few more months if it means we get it right and get it working properly,” said Croft.