Traditional rivals, Lloyd's and the London company market, are increasingly working together in the desire for reform, says Marie-Louise Rossi.
Aims of the forum
The forum will meet monthly and concentrate on four areas:
• The payment of claims, the issuance of policies and the payment of premiums The objective is to ensure the shortest possible delivery time in each case.
• The setting of ambitious service standards in a number of key areas. Statistics will be published showing the performance of brokers, underwriters and central services against these agreed standards. This transparency should reinforce the pressure to improve service performance.
• Supporting existing and new initiatives to improve access for brokers to the London market by simplifying procedures, adopting international processing standards and sponsoring joint developments between LPC and LPSO.
• The promotion and early adoption of e-commerce and electronic trading.
There is more news in conflict than co-operation, more headlines from disputes than mutual agreements.
Yet, the new alliance in the London insurance and reinsurance markets, symbolised by the joint visit to the United States of Max Taylor, chairman of Lloyd's, and Tim Carroll, chairman of the International Underwriting Association of London (IUA), in July promises to have a huge impact on the business opportunities which the London market offers and the service levels customers of (re)insurance can expect.
Jointly with Lloyd's, we have announced the initial stages of a top-level forum to streamline processes in London. It is a significant step towards a more cohesive market and an unprecedented level of co-operation. Increasingly, Lloyd's and the company market, traditional rivals, have been working together in the desire for reform.
The impetus for the joint initiative came, I believe, from the emergence of the IUA as the single market body for international (re)insurance companies trading in London at the end of last year. This, in addition to the fact that Lloyd's had put its troubles of the late 1980s and early 1990s behind it, made the timing right for this new venture.
Shortly after the IUA was formed, our chairman Tim Carroll said the primary aim was to modernise business practices and work with Lloyd's to make the market more accessible, user-friendly and efficient.
First, the introduction of new service standards will enhance transparency and good practice amongst brokers and underwriters. Claims and premium payments and issuance of policies will be judged against benchmarks, and the results published on a regular basis.
People conducting business through the London market will be able to look at past performance in order to know what levels of service they can expect.
Second, the forum will reduce fragmentation in the market. While the diversity and choice in London make it unique, it is also frustrating for the potential customer to find that the Lloyd's and company markets have different practices from each other. This is why we are committed to harmonising the work of the two processing bureaux, Lloyd's policy signing office (LPSO) and the London processing centre (LPC), a wholly owned subsidiary of the IUA.
Lloyd's and the company market in London have traditionally been rivals competing for business. They will continue as rivals once the business has come to London, but individual (re)insurance companies and Lloyd's syndicates will compete in the areas that really matter: product quality and service will be important, not differences in procedure.
The needs and expectations of the customer are evolving all the time. In the age of the internet and electronic trading, we have to be a step ahead. This is a third driving force behind the new forum.
The market recently showed its commitment to embracing the opportunities that electronic commerce brings by supporting the creation of Worldwide Insurance e-commerce (WISe), formed from three existing industry networks, LIMNET, in which Lloyd's and IUA each had a 50% stake, RINET and WIN.
Finally, despite London's concentration of expertise and choice of capital, we recognise that it must continue to strive to reduce frictional costs in order to maintain its lead position in international wholesale insurance and reinsurance worldwide.
Without reform, as Tim Carroll has said, the London market is in danger of being bypassed. The forum has been set up to rise to the many challenges ahead.
Marie-Louise Rossi is the chief executive of the International Underwriting Association of London (IUA).