For insurers operating in the Lloyd’s market, the countdown is on. As the market prepares for the transition to Blueprint Two (BP2), the fate of legacy claims data hangs in the balance. While BP2 promises cleaner, more structured data going forward, it also signals the end of easy access to the historic data that underpins the reconciliation and repatriation of loss funds. 

Unless action is taken, these legacy records will disappear—leaving behind a trail of stranded funds that may never be recovered. 

Loss funds: a hidden, under-reported asset 

Loss funds serve a vital purpose: enabling claims to be settled efficiently without constant referral to carriers. But over time, these funds become fragmented, under-reconciled, and—critically—forgotten. Our experience suggests that many insurers believe they know where their loss funds reside. In practice, however, we often find the reality is very different. 

Across multiple portfolios and carriers, purging exercises, outdated reconciliation processes, and poor historical record-keeping have created black holes in loss fund visibility. And with the BP2 cutover approaching, time is running out to retrieve these assets while the data is still accessible. 

The BP2 deadline: reachback comes with risk 

After BP2 goes live, legacy claim records will only be retrievable via formal ‘reachback’ requests. This is a process designed to support exceptions—not a scalable solution for large-scale forensic reviews. Bringing back aged records into what is supposed to be a clean, digital slate risks disrupting the very improvements BP2 is designed to deliver. 

Which raises a question: why wait? 

Now is the optimal time to complete a thorough reconciliation of historic loss funds, identify trapped capital, and repatriate value before access to the underlying data becomes more complicated—or impossible. 

Broader implications for insurers 

Unreconciled loss funds are not just a missed opportunity—they’re a strategic vulnerability. In a market increasingly focused on capital efficiency and transparency, idle funds restrict insurers’ ability to allocate capital effectively or invest in growth. 

They also pose: 

• A capital drain – with stranded funds sitting outside core financial systems, insurers lose the ability to redeploy or invest those resources 

• Regulatory and compliance risks – especially as solvency and financial reporting expectations evolve post-Brexit 

• Operational inefficiencies – with manual reconciliation processes increasing administrative overhead and limiting visibility 

In this context, proactive loss fund management becomes more than good housekeeping. It becomes a means of maintaining competitive advantage and protecting financial health—especially in a hardening market. 

Proven returns from forensic review 

At Davies, our loss fund service has consistently identified and returned material sums for clients—sums that would otherwise remain idle, distorting financial performance and tying up capital. The aviation market, with its unique operating structures and volumes of long-tail exposure, is one example where we’ve helped multiple clients recover between £50–75 million in unclaimed loss funds over time. 

These aren’t theoretical savings—they’re real, tangible returns that demonstrate the value of proactive review. 

From recovery to reform 

While reconciliation and recovery are vital, we believe this issue points to a broader market need: a structural rethink of how loss funds are managed. 

Rather than allowing funds to languish with third-party administrators (TPAs) or DCAs indefinitely, we support the idea of a market-wide initiative to crystallise loss fund positions. Where funds remain necessary, they should be transitioned into more modern, flexible cash management solutions—such as Vitesse’s Fund Control Platform (FCP)—subject to market appetite. 

Such a shift would not only release trapped capital, it would also bring greater transparency and control to an area of financial management that too often flies under the radar. 

Act now, not after BP2 

Insurers face a narrow window of opportunity to address this. Waiting until after BP2 risks handing over control to manual retrieval and exception processes—at which point, the exercise becomes slower, more complex, and potentially less complete. 

Legacy loss funds are more than an operational anomaly; they’re an overlooked financial asset. For those who act now, the rewards are real and measurable. For those who delay, the opportunity may not return. 

If you would like to continue the conversation, get in touch with Director, Market Services, James Jacob at james.jacob@davies-group.com