* 330-year old trading room shuts due to coronavirus
* Lloyd's has plan to move most trading to electronic
platforms
* London is world's largest commercial insurance centre
By Carolyn Cohn, Noor Zainab Hussain and Jonathan Saul
LONDON, March 27 (Reuters) - Thousands of London's
underwriters took their stamps and fountain pens home last week,
which they use to sign insurance contracts, but they won't need
them.
Working at home due to the coronavirus lockdown, they have
abandoned the normal tools of their trade and are turning to
email and other electronic systems to agree terms with the
brokers who put business their way.
It's a huge change from a normal day at Lloyd's of London
in the heart of the capital's financial district,
where underwriters receive queues of brokers at their desks to
haggle over terms, before sealing the deals with an
old-fashioned company stamp and an ink signature.
Each deal can require up to 20 signatures and stamps.
With the closure of the underwriters' floor, the world’s
leading commercial insurance market, Lloyd's - which started
life in Edward Lloyd's' coffee house in 1688 - has gone fully
online for the first time.
The lockdown could prove a watershed moment. If the shift
goes off without any major hitches, it will likely smooth the
way for the market to go far more digital, underwriters and
brokers said.
So the mass working from home is effectively a test of the
business's prospects for long-term survival as it looks to cut
costs and modernise in the face of overseas competition.
"Edward Lloyd's coffee shop was a social environment where
merchant traders could gather - today you have the internet, you
have mobile phones," said Bruce Carman, chief underwriting
officer of insurance firm Hive Aero, who has worked in the
Lloyd's market for more than 30 years.
"The speed of trade should be far quicker than someone
traipsing around the marketplace in leather shoes."
GOODBYE TO ALL THAT?
Lloyd's runs a market of more than 90 underwriting firms,
who price specialist risks from ships to sculptures. Hundreds of
broking firms arrange insurance deals between their corporate
clients and the Lloyd's underwriters.
Lloyd's already had a plan to move to electronic exchanges,
but many brokers and underwriters had resisted, arguing complex
transactions were more easily handled face to face.
The shutdown highlights how the coronavirus crisis is
putting a brake on centuries-old traditions.
Lloyd's was focused on shipping when it started 332 years
ago and, until the closure, a bell still rang on the
underwriting floor when a ship sank at sea, and marine insurers
recorded the shipwrecks in a loss book with quill pens.
The bell was rung last week to mark the shutting of the
so-called "underwriting room" in response to the pandemic.
CORONAVIRUS CLAIMS
The lockdown comes as the insurance industry braces for
hefty claims linked to the virus outbreak due to supply chain
disruption and cancellation or postponement of sports events and
other mass gatherings, including the Olympics.
Lloyd's, which took in 36 billion pounds ($44 billion) in
premium revenue last year, and turned a profit after two years
of losses, may benefit from the market's need to adapt in a
hurry, CEO John Neal told Reuters.
"People want to accelerate the modernisation agenda," he
said.
Underwriters and brokers are already able to process part or
all of a trade electronically through platforms such as PPL. But
many have preferred not to do so.
Sue Jacobek, managing director of PPL, said that since the
underwriting room closed, the number of users on the system had
risen by 15% and 150 people a day were going online to learn how
to use it.
Dan Hearsum, head of placement, UK specialties, at insurance
broker Marsh, said his team would normally hold 200-300
face-to-face meetings with clients over the space of a few
weeks. These have been replaced by video calls, while staff
morale has been kept up by internal teams video-chatting wearing
"silly hats".
"We want to make sure the banter that was going on in the
office before can still go on."
KEITH RICHARDS' HANDS
Alex Craggs, chief underwriting officer at insurer Antares,
said the firm was "adapting as best we can" to home working, but
that it was hard to replicate face-to-face trading exactly.
"There's a greater danger now we'll overlook the nuance of a
risk because we are looking at it on a piece of paper."
Lloyd's prides itself on pricing large, complicated risks.
It reportedly insured Rolling Stones guitarist Keith Richards'
hands for $1.6 million and Kiss frontman Gene Simmons' tongue
for more than $1 million.
Working from home could make those deals harder.
"When you have a complex renewable negotiation, which is
difficult even in an office, and when underwriters are at home
and physically cut off from their colleagues, it begs the
question how feasible this is going to be," one senior insurance
industry executive said.
"This is a stress test for electronic trading," he added.
"When claims come through over COVID-19, how will the system
hold up?"
($1 = 0.8169 pounds)
(Additional reporting by Sinead Cruise; Editing by Josephine
Mason and Pravin Char)