Blueprint Two: Preparing for Phase Two – How Businesses in the London Insurance Market Can Adapt and Thrive

The London insurance sector has had since September 2019 to prepare for Blueprint Two, following its launch by Lloyd’s in May of that year. Designed to modernise the industry, Blueprint Two now focuses attention on digitalisation, data-driven processes and new operational models. We look at the anticipated changes, the challenges it poses and what steps businesses can take to prepare.

Blueprint One outlined the key goals for the London insurance sector: 

• Offer better solutions to the risks faced by the market
• Deliver better products and services to the market and capital providers
• Simplify the way the industry works by increasing efficiency and reducing costs
• Build an inclusive culture, where everyone feels valued

Blueprint Two, which will be delivered in two phases, enables all insurance firms to adopt a fully digital approach via the Digital Gateway risk service which allows full digital placement of risk. Phase Two, which businesses are being encouraged to adopt in a single block across all business areas simultaneously, requires firms to make four key changes so that they can take full advantage of the new digital processing platform, and continue to trade on the London market:

1. Standards - ACORD, EBOT and ECOT will be adopted so that firms can submit transactions, and new Core Data Record data standards will come into operation
2. Messaging – ACORD standard, EBOT and ECOT messages will enable firms’ capability to receive processing outputs and notifications, including query management
3. Automation – Velotonic technicians will continue to process, sign and settle transactions, further increasing automation
4. New digital market services – firms will be able to access a new full digital processing platform to enable the creation of digital records.

What impact with Phase Two have?

The benefits that Blueprint will have are enormous. They include significant internal savings, fully automated digital accounting services, improved consistency of validations and a reduction of human errors, 24/7 service availability and access, and up to a 40% reduction in central services charges.

Blueprint promises much for customer interaction too, creating a seamless customer experience and making the industry more adaptable, effective and efficient.

The challenges

The £300 million cost of Phase Two is just one of the challenges organisations face in moving to a digital-first approach. 

Many insurance companies are still using outdated technology (some of it up to 30 years old) and need to begin the transition from legacy systems, so will inevitably face the difficulties of modernising quickly and efficiently, especially if they lack the skilled personnel needed to deal with complex digital systems. Those who fail to transition quickly run the risk of losing business to firms that are already digital capable.

Compliance is also an issue, especially concerning new European directives such as NIS2 and DORA which both require enhanced resilience against cyber attacks to prevent data loss and disruption.

Both data management and data quality require robust strategies to ensure consistency and quality. Some insurers have expressed concern about the practicalities of capturing and standardising accurate data, and the difficulties of implementing cohesive management strategies to avoid inefficiency and potential governance issues.

General concerns also involve reservations around the timeline for Phase Two, and its scope, whether software providers will be able to fully support the transition, and whether its adoption can be fully guaranteed.

Preparation for Phase Two

In the light of the many challenges insurance organisations face, it’s vital for them to prepare properly for Phase Two’s full implementation. Businesses need to realise the importance of readiness assessments, including evaluating their current systems, legacy processes, and organisational capabilities.

Practical steps insurance firms can take to align with Phase Two’s digital and operational requirements include:

• Investing in technology and data capabilities
• Upskilling employees to adapt to new systems and workflows
• Strengthening governance and operational resilience. 

Some organisations might also experience resistance to change and face difficulties in fostering a culture of innovation. These challenges can be overcome by establishing a supportive style of leadership, outlining a clear vision, developing a structured approach to innovation, encouraging and empowering employees to have new ideas, communicating and collaborating effectively, and ensuring that teams are as diverse as possible.

How Brighter Can Help

Our extensive experience in change management within the insurance industry covers implementing regulatory and compliance standards across all levels, navigating complex finance transformation, and applying cutting-edge technology solutions, among other things. 

We offer our clients tailored solutions to guide businesses through any transition, particularly one as complex and important as Blueprint, offering readiness assessments and strategic planning, operational restructuring to align with Blueprint Two requirements, training and development programmes to upskill teams, and implementation support to ensure smooth integration of new systems and processes.  

Act now

It’s essential that businesses act now to prepare for Phase Two to avoid falling behind in a rapidly-evolving market. 

If you’d like further guidance or support in implementing Blueprint Phase Two contact Brighter Consultancy for a confidential discussion about how we can assist your transition.