As Aon reveals a huge leap in electronic placing at the 1/1 renewals, does this solidify technology's place in the London Market?
Aon’s announcement that it had completed 80% of its 1/1 treaty reinsurance renewals electronically is a huge step in the race to digitise the industry.
A statement from Aon boasted that it had “aimed to place as much as possible of its London book of treaty business electronically into the global markets,” and had achieved this goal, “with more than 5000 lines placed …as well as several hundred endorsements.”
Aon, along with Brit and Aviva, all used the RI3K electronic trading system at this renewals, making a significant move from the traditional paper-based system of trading.
Alex Letts, chief executive of RI3K, was understandably upbeat when GR spoke to him.
“80% of renewals through the system for Aon is a significant figure and we are obviously very pleased. We have seen significant market moving volumes happen and I think this gives us is an extremely solid foundation for the industry.”
Even the famously optimistic Letts had to admit however that the process was not without its problems, although they largely rested with user queries rather than the actual software.
“We have learnt a lot from these renewals, even though the actual technology held up very well. From our side, the issues that we face stem from the complex issues that we are trying to digitise – sometimes they could be a lot simpler. But you only discover that when you get to start using the technology in the heat of battle.”
Letts pointed out that the record volumes of business processed this renewals period would soon become the norm on a daily or monthly basis. As such, now the technology has been proven, it is the refinements and industry education that needs to be worked on.
“We’re definitely getting there,” Letts conceded, “but it’s by no means the ‘Hallelujah!’ moment just yet.”
Reports from the actual users have been good, according to RI3K, and although the frontline support centre had a busy Christmas, it was mostly dealing with customers using the technology for the first time.
“There is always going to be a learning curve,” added Letts. “I know how frustrating using new work methods can be and I think all the users handled the situation with a great deal of sense and patience.”
Proof of concept
These renewals have acted as a kind of proof-of-concept for technology in the insurance and reinsurance industry.
The success of the RI3K system, alongside the other electronic trading systems in the market, proves the technology is scalable, reliable and most importantly, industry strength.
If 2007 was the year when technology landed in the London Market, according to Letts, then 2008 will have to be responsive to what the market needs to make this system the daily way of trading
But with memories of Kinnect still fresh in the market’s mind, how can we be sure that this is not just another flash-in-pan success story? Alex Letts’ mind is made up:
“Electronic trading is now absolutely here to stay.”