Ultimately “all the King’s horses and all the King’s Men” couldn’t put Kinnect together again. The King’s men in this case being the management of Lloyd’s, who have finally thrown in the towel on the London Market’s highly touted IT platform.
Acting Kinnect Chairman Michael Dawson announced the news in a letter to Lloyd’s management. “When I wrote to you in December following the 15th December Franchise Board meeting I committed to update you on developments regarding Kinnect,” Dawson wrote. “I am writing to inform you that following the Kinnect Board’s recommendation, the Franchise Board has agreed not to fund the Kinnect platform going forward. They have decided that the platform was not optimal in ensuring more efficient business processes for the Lloyd’s and London market and as a result it will close.”
First announced in 2001, as the “Blue Mountain Project,” Kinnect aimed at nothing less than reforming the way Lloyd’s has done business for over 300 years. It was to do away with the bulging slip cases and the approximately four tons of paper Lloyd’s produces every day by converting the brokers and underwriters over to an electronic platform, integrating computers and technology.
Always an ambitious – and expensive – project, Kinnect ran into trouble from the very beginning, as the programs its mangers designed ultimately couldn’t perform the tasks they were supposed to in a satisfactory manner. The handwriting appeared on the wall last fall when Toby Davies, Kinnect’s CEO, and Iain Saville, the project’s executive chairman, both stepped down. (See IJ Web site Sept. 14).
In his letter Dawson noted “that support for a centrally built hub was not sufficient to continue the development of Kinnect.” A near majority of Lloyd’s brokers and underwriters remained reluctant to adopt the system, despite the fact that many Lloyd’s Syndicates and a number of their corporate sponsors and financial backers had pledged to adopt to do so.
In addition, as Dawson recognized, other initiatives have been gathering force to replace Lloyd’s antiquated infrastructure with more modern systems. Increasing standardization in the Lloyd’s market, notably the adoption of a standard LMP (London market principle) slip to bind coverage, and increasing pressure from the FSA to assure contract certainty (See IJ Web site Jan. 11) nonetheless requires an electronic platform as part of the process.
Kinnect was perhaps too ambitious, and/or too unwieldy, to fulfill that need. Smaller, leaner and more nimble companies have stepped into the breach, and they may succeed where Kinnect failed. One of the leaders, London-based RI3K, which already provides a platform for technology infrastructure for the reinsurance industry, has been working on adapting it to allow brokers and underwriters to use it in the general Lloyd’s market as well.
Alex Letts, RI3K’s chief executive, along with many others familiar with the London market, have long been aware of Lloyd’s problems with Kinnect. But he expressed no gratification at its ultimate demise. “It’s desperately hard on the staff at Kinnect,” said Letts. “We will try to find spaces for some if we can.”
Lloyd’s will eventually have a working electronic platform. It really has no alternative, but to adopt one and make it work – primarily to comply with increased regulation and to cut the costs of placing business in the London market in the face of increasing competition.
Ironically Kinnect’s demise may speed up the attainment of that goal, as more adaptable technology becomes available, that will eventually convince Lloyd’s underwriters and brokers to trade in their slip cases on a new model.
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