The Lloyd’s Exchange pilot initiative (See IJ web site – https://www.insurancejournal.com/news/international/2009/01/13/96927.htm] was formally introduced on Thursday to the general approval of all concerned. IBM has been chosen – to no one’s great surprise – to set up the system.
Lloyd’s stated on its web site (www.lloyd’s.com) that the messaging hub has two key aims:
— To remove the future need to maintain multiple connections with other parties and suppliers in the market, and
— to ensure that one standard is enforced.
“The ultimate aim of this initiative is that a common standard is enforced across the market that will allow the electronic exchange of standardized information throughout the insurance process.”
In a telephone interview, Jeff Ward from London Market reform technology specialists TriSystems, noted that the IBM system “is not a design and build project.” He explained that the essential parts of the system had been set up in 2003 with five companies and more than 1000 regional brokers brought in to use it. “It’s tried and tested technology,” he said.
Ward noted that Sue Langley, Lloyd’s Director of Market Operations and North America, had stated at the briefing that past failures [most notably Lloyd’s Kinnect] occurred because the systems were too difficult to build. “They tried to be ‘all things to all men,'” said Ward, “and you can’t do that in IT. The London market is very diverse, and to achieve any kind of reform you have to take it in bite size chunks.”
Lloyd’s noted that initially, “the Lloyd’s Exchange will allow market participants to exchange risk information electronically using the common ACORD data standards. It is anticipated that business software suppliers will connect to the Exchange to offer value add services and products to the market.”
Ward’s company, Tri Systems, is one of those companies. He explained that the advantage of having many suppliers makes it easier for companies to use. Those that already have their own communications systems can easily adapt them to connect to the Exchange. “It’s plug and play,” said Ward.
Companies that don’t have electronic systems, or systems that are inadequate, can obtain the basic software they need on an individual basis and at far less cost than installing an entire system, as they work over existing Internet connections.
Lloyd’s stressed that “with the multiple choices and standards in the market developing into a ‘spaghetti’ model progress can be slow and costly. The Lloyd’s Exchange aims to simplify this. Additionally, it will reduce the barriers to entry and the risk of participation for market organizations who have not yet committed to the electronic environment.”
Making those connections, and working out the inevitable bugs, will, however, take time. “10 to 15 companies will be in the first wave,” said Ward, “followed by another group in the third quarter.” In recognition of this, Lloyd’s has given the initial contract a three year span before it’s renegotiated, which Ward described as a “sensible fragmentation approach.”
He added that “IBM was indeed the right choice,” given its prior experience. “It’s also the right system,” he continued. “The London insurance market is highly complex, and you can’t replace face to face contact.” What you can do is implement the system so that everyone uses the same technical tools, and “the whole market can talk to one another.”
Source: Lloyd’s and Tri Systems – www.trisystems.co.uk
Topics Excess Surplus London Lloyd's
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