Economies of scale still have a powerful influence on markets. U.K.-based RI3K, which has pioneered and implemented one of the London market’s most successful electronic trading platforms, underlined that fact with its announcement that, “due to a dramatically changed landscape,” it will cut fees for underwriters using its electronic marketplace by 80 percent.
“For all risks bound on the RI3K Marketplace after 1st August 2006, underwriters will be charged only £50 per line [$91.00),” said the Company’s bulletin. “The previous charge was $500. There will also be a small £10 [$18.20] fee for each endorsement.”
RI3K has been in the forefront for the development of the much needed electronic processing services for London’s brokers and underwriters (See IJ Website Jan.26, May 30). According to the Company, its “Marketplace brings risks in a structured, contract certain, auditable format to the desktop of the underwriters. This means that when the risk is bound on-line there is a single record of the placement process and a single copy the contract wordings, with all its versions.”
Aon’s recent decision to adopt electronic processing provided the significant breakthrough the market has been waiting for as well as the impetus to lower costs (See IJ Website June 23).
Alex Letts, RI3K’s Chief Executive commented: “Last year we made a commitment to the market that as volumes grew we would work towards a £50 price point. Recent activity around broker distribution has allowed us to bite the bullet and make the move in a single step.
“We are working within the FELIX framework to hand-off the data electronically to XIS. We would encourage companies to speak to us about how to receive this data electronically to reduce their own processing costs,” he added.
“RI3K’s Marketplace creates ACORD standard data around the placement process for all types of reinsurance risk,” the bulletin continued. “Direct insurance will be tradeable from this September. RI3K has built the electronic trading service to support all types and all classes of business, treaty as well as facultative.”
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