In a breakthrough move, Aon U.K., announced that it “will move to a full electronic trading capability during 2006 for its specialist insurance and reinsurance businesses.”
Aon’s London-based operation plans to phase in electronic trading gradually. It “will begin to transition its portfolio of specialist insurance and reinsurance business from physical to electronic distribution in July this year,” said the announcement. “This means that in the near future all contracts and endorsements distributed by Aon in London can be signed on-line, not on paper.”
Aon’s decision marks the start of the long awaited move to electronic trading platforms. Although many London underwriters and brokers use electronic technology, it has not been employed on a mass scale, certainly not one as large as Aon’s, to begin doing away with the mountain of paperwork the London market in general, and Lloyd’s in particular, generates every day.
Aon said: “The implications for insurers and reinsurers are far reaching. They will now be able to receive electronic notification of the incoming offers, agreed quotes and signed lines directly into their underwriting systems. This will provide greater transparency and certainty around the contract, remove much of the re-keying associated with the current process and also significantly reduce the possible degradation of information provided to underwriters.” It will also give Aon’s “clients around the world easier access to London underwriters.”
Aon explained that it is “working with a number of hub providers and, in the case of the RI3K electronic market place, has simplified the interface and agreed a substantially reduced pricing tariff for underwriters to reflect the increased volumes.” It has also “developed its own technologies for preparing the electronic submission and will distribute risks from its Concert / Aon Broking Connections (ABC) platform using internationally compliant ACORD messaging.”
“We have made significant progress developing agreed standards with the G6 group of underwriters and are now in a position to optimize the use of these standards. Our infrastructure gives insurers and reinsurers connectivity options suited to their own strategy,” explained Ian Summers, director of change strategy at Aon. “Aon’s technology can talk either direct to insurers or reinsurers or via a service provider of their choice, all to the benefit of our clients.”
Ironically Aon’s breakthrough move comes on the heels of the demise of Lloyd’s long awaited Kinnect project to bring electronic trading to the London market (See IJ Website Jan. 24). Kinnect ultimately failed because it was too rigid and tried to be too inclusive. Individual brokers and underwriters have stepped into the gap to develop and integrate alternative systems.
These are being joined to the capabilities supplied by electronic trading platform providers such as RI3K, which recently announced the launch of its “London Market Electronic Insurance Exchange” (FELIX) (See IJ Website May 30). RI3K described the system as providing “a framework that charts the business processes, messages and enabling market technology services needed to provide an end-to-end electronic insurance exchange.” Plans call for it to be fully operational by the end of September. CEO Alex Letts foresees more and more electronic trading and processing in the London market in the near future.
Aon’s decision would seem to confirm that prognosis. “The technology is now in place and Aon is ideally positioned to help the market make the transition from paper processes to the vastly more efficient electronically supported processes,” Summers continued. “We are proud to continue our leadership in the modernization of the London market.”