Our bold headline this month “Raising the Titanic” (page 10 onwards) is about the renewed efforts to establish a New York Insurance Exchange, 20 years after the previous attempt failed dramatically. Efforts to establish a “Lloyd’s” in New York in the 1980s came a cropper. The market was seen as a dumping ground for the risks nobody else wanted and that led to its quick demise.
I did wonder whether “Raising the Titanic” could be deemed a suitable title for another endeavour underway in the industry. Just over two years after Kinnect became a £75m failure, it seems the Lloyd’s market is ready to have another go.
It is inevitable that any new technology initiative at Lloyd’s will be haunted by the ghost of Kinnect. Jeff Ward, business development director at TriSystems, says it’s time to move on (and our journalist Marcus Alcock agrees – page 22). “It was absolutely inevitable that it was going to be called ‘the son of Kinnect’ but people have got to stop talking about Kinnect as a reference point.”
Lloyd’s has sent out a pre-qualification questionnaire to 26 IT companies to help it develop a new electronic messaging hub. Bearing in mind that I am not a particularly tech-savvy person, the hub will apparently sit in front of the market and receive and sort all the electronic messages into and out of the market.
As well as linking brokers and insurers, it will also link to trading exchanges, such as RI3K. “Any Lloyd’s system would be looking at a simple messaging exchange as opposed to a full trading platform like RI3K,” explains Sue Langley, director of Market Operations at Lloyd’s. “This service will be an off-the-shelf solution.”
While a significant proportion of the market can already receive data messages, this will cater to those managing agent yet to invest in a messaging solution. Ultimately, the aim is to bring down the costs of transacting day-to-day business in the 320-year-old market and to benefit all parties – large and small.
So will it work? To have invited 26 companies to participate is a massive undertaking. The latest indications are that Lloyd’s is now only looking at messaging hub infrastructure providers. IBM, Atos and Xchanging are thought to be frontrunners as they all have existing solutions. Even with the field considerably narrowed, the market might struggle to find the “all singing, all dancing” solution it’s after with just one provider. Ward reckons the market will have to take two or more companies on board.
The secret to achieving what the market wants is in keeping things simple. Not trying to be all things to all people, which is where Kinnect fell down. “Rather than trying to be something that is functionality rich, it’s going to be the other end of the spectrum and will be as simple as possible,” explains Graham Wright, a partner in IBM’s management consulting business. IBM is keen to draw attention to the existing messaging hub it already has up and running. The regional insurance platform, called imarket, has been operating since 2003 on behalf of Polaris. “Don’t build something you can’t already see up and working,” says Wright. But then he would say that.
Both imarket and Atos’ solution, WritePlace, are set up to deal with ACORD standards – the language of electronic trading. A messaging hub will take this form of trading to the next level. It is all about the market “throwing down the gauntlet” and “breaking the inertia” so the “snowball effect” can take place, according to the technology pundits. Which all sounds vaguely familiar.
Some sources argue this latest initiative is just a reaction to Lloyd’s CEO Richard Ward’s frustration at the pace of change in the market. After all, the major brokers and managing agents have already got messaging solutions in place and those that don’t, probably don’t want them.
Here Lloyd’s faces its biggest challenge. It has a major PR exercise on its hands. A couple of decades and several technology failures down the line, how can the market be convinced that this latest venture won’t be consigned to the rubbish heap alongside all the others?