The Target Operating Model (TOM) is a London Market-wide initiative that forms a core part of the Market Modernisation proposal, as set out by the London Market Group. Its purpose is to make conducting business in the London Market easier, both locally and globally.

TOM was proposed in April 2015 to support the London and Lloyd’s markets and, having been given a five-year funding plan with a £250m budget from the Market, significant operational and financial benefits are expected in return. The programme is one of four work streams in the London Market Modernisation project and it seeks to build on current market practices whilst factoring in the greatest possible effective and appropriate use of technology.

The London Market Group (LMG) spent much of November and early December 2015 holding consultation events across the Market to gather vital information to enable the TOM programme to progress and, as a result, TOM will be majorly developing in 2016. It is of great importance that the programme understands the Market in order to ensure they are driving the correct projects, technology and outputs and are being innovative in their solutions. The TOM website has been filled with comments and views from people within the market, helping them to gage the responses and thoughts of their audience.

The LMG’s report, London Matters, identified a number of challenges to the current position of the London Market as the world’s undisputed global centre of excellence for commercial insurance and reinsurance. These include – amongst others – the unique London Market requirements that cause barriers for business; high expense ratios; price disadvantages; a lack of presence in emerging markets; and a declining market share in reinsurance. The report also aroused key questions such as how London could improve the ease of doing business, and to what extent shared services and infrastructure activity could lower costs and improve service. If these questions are not addressed then it could indeed affect the London Market’s current global position.

The TOM programme aims to improve these issues with its Service Hub. It builds on the strengths of the London Market and has the objective that face-to-face negotiation will be supported and facilitated by electronic data capture. This will be used for placing, signing and closing risks as well as claims and renewals.

TOM has therefore been designed around two principles. The first will implement ‘one touch data capture’, enabling all data to be entered just once on behalf of all carriers and brokers. All data will be translated into a common global standard early on in its process removing the necessity for the same data to be entered multiple times by multiple parties, and therefore reducing both the risk of error and cost of re-entry and duplication of labour. It will increase the proportion of processing that is correct first time and remove the barriers that prevent access to the London Market from overseas.

The second principle of TOM is to introduce a global shared central service to the Market. Many of the non-competitive tasks would be more efficient and consistent if they were delivered from a central place instead of each Broker or Carrier repeating the same task on the same risk. Having a shared central service will allow them to instead concentrate on the areas that differentiate their business from others.

You can view the official TOM website here.