As the London insurance market enters a softer pricing cycle and the delivery of Blueprint Two slips further into the distance, 2026 is emerging as a year of strategic separation. With core reforms now unlikely to land before 2028, and legacy platforms expected to persist well into the next decade, firms are increasingly making their own calls on pace, investment and operating model.
For some, delay has become an excuse for inertia. For others, it has acted as a forcing mechanism.
“The delay has almost acted as a starter pistol,” said Jamie McDonnell (pictured), director of London Market at Guidewire. “It’s made it clear to pioneers in the market that they are not going to wait around for central resolution of all the complexity.”
For years, London’s digital transformation has been slowed by legacy infrastructure, technical debt and manual processes embedded deep within underwriting workflows. The postponement of Blueprint Two has not removed those pressures; instead, it has clarified them.
Some firms have responded by redirecting capital and talent into their own modernisation programmes, decoupling progress from the central reform timetable. Peer-to-peer integrations between brokers and carriers, such as Marsh’s work with AXA XL, are increasingly being viewed less as pilots and more as alternative operating paths.
“For many others,” McDonnell said, “the reaction has been: ‘We no longer have to put resources into Blueprint Two testing… so what are we going to do instead?’” For firms already investing ahead of the curve, the delay has been less disruptive than validating.
As Lloyd’s of London sharpens its focus on underwriting discipline and performance oversight, insurers face a clearer structural choice.
“The market is bifurcating,” McDonnell said. “Are you going to be a leader in the majority of your lines of business? Or are you going to become a dedicated fast-follow capacity provider?”
Both models can succeed, but each demands a different technology and data foundation. Firms positioning themselves as leaders need to equip underwriters with real-time analytics to support decision-making at the point of risk. Fast-follow participants, by contrast, require end-to-end portfolio visibility and algorithmic pricing tools embedded directly into broker workflows.
Facilities and automated follow placements, once framed as emerging concepts, are now materially reshaping placement strategies. “Eighteen months ago, most were talking about placing 30–40% of a slip that way,” McDonnell said. “Now in some lines, we’re seeing up to 50%, with brokers like Marsh and Aon leading the way.”
Relative to peers in Bermuda or among North American MGAs, where leaner organisational structures and modern core systems are more common, London has historically moved more slowly on foundational technology change. That gap, however, is becoming harder to sustain.
“We are now reaching the point where the lack of API-ready core systems is coming to a head,” McDonnell said. “Firms are not getting the ROI they expected from incremental changes at the edges, because the foundations cannot support them properly.”
Insurers that deferred large-scale core transformation are increasingly finding that front-end tools, submission platforms, rating engines and underwriter workbenches, cannot deliver meaningful efficiency or insight without integrated back-end systems capable of supporting them.
Pressure is also mounting on risk models, particularly following the $40 billion California wildfires of early 2025.
“That was roughly four times bigger than anything the market expected from a so-called ‘secondary’ peril,” McDonnell said. “It drove home the need for granular, property-level data and real-time aggregation control.”
Loss volatility at street level has underscored the importance of detailed underwriting inputs, fuel types, vegetation density, construction features and storage practices, and their integration into portfolio-wide models. “Secondary perils have moved up the agenda because they’re now capable of impacting overall loss ratios in ways they traditionally didn’t,” he said.
Cyber insurance, despite softening rates, remains operationally demanding. McDonnell noted that recent pricing pressure has been driven largely by elevated submission volumes outpacing demand, rather than a fundamental reduction in risk.
Digital triage tools and submission analytics are increasingly central to maintaining underwriting discipline in that environment.
Ross McIvor, client engagement director at Guidewire, added: “In 2026, ‘smarter’ risk management means the insured moving from being a passive buyer to a proactive partner in their own resilience… Supply chain visibility is now the most critical gap.”
While softer conditions may tempt some insurers to delay deeper investment, McDonnell cautioned against short-term thinking.
“This is the first soft market cycle where we’ve had AI tools actually in the hands of underwriters and claims handlers,” he said.
Scaling those tools, however, depends on the underlying architecture. “Some insurers only want ROI in under 12 months. Others are playing the long game,” he said.
His message was clear: downturns reward preparation. “The best fishermen are not in the pub when there’s a storm. They’re back in the boatyard fixing nets and boats. For insurers, this soft market is the boatyard.”
