Munich Re will launch the first Lloyd’s “syndicate-in-a-box” and the market will next year start testing an electronic risk exchange for less complex covers as part of a major transformation program.

The syndicate-in-a-box pilot will begin underwriting in January with no physical presence in Lloyd’s and will cover innovative lines of business such as renewable energy and parametric insurance for weather risks.

The plans were outlined in a “Blueprint One” document released overnight that updates the Future at Lloyd’s reform process that in May opened consultations on six ideas to drive digital technology and “supercharge innovation”.

Lloyd’s says phase one will be delivered during next year and will include the launch of the electronic exchange for relatively non-complex high-volume risks that could, over time, process as much as 40% of Lloyd’s risks. Phase two of the reforms runs through 2021 and phase three from January 2022 onward.

Market plans include piloting a solution that automatically triages claims to speed up settlement and development of an end-to-end complex risk platform that complements face-to-face negotiations.

“The plans unveiled today create execution certainty through phased delivery,” Lloyd’s CEO John Neal said.

The syndicate-in-a box concept is well advanced and aims to encourage innovators to come to the market through a streamlined entry process that could pave the way for them becoming a “full” syndicate after three years.

Feedback during consultations stressed that Lloyd’s should avoid creating a two-tier system, there should be no increased risk to the Central Fund and that high-performance standards for all market participants should be upheld.

The electronic exchange for less-complex risks received strong support, with many stakeholders “supportive and excited about a new opportunity to write less complex risks that would expand Lloyd’s distribution reach and reduce costs”, according to the document.

Lloyd’s is also looking to encourage new capital into the market, including through insurance-linked securities, following 2017 legislation permitting tax-transparent structures in the UK.

“The benefits will be confirmed by pilots, several of which will launch in early 2020, including ILS,” the Blueprint One report says.

Chairman Bruce Carnegie-Brown says the strategy document is “deliberately ambitious” but a phased approach will allow thorough testing of each component and accelerate time to market.

“This means we will start delivering value to customers and the market quickly. We will regularly communicate our progress as we move through the phases.”