When Lloyd's and the International Underwriting Association of London set up their joint forum last summer, the respective chairmen Max Taylor and Tim Carroll promised “radical changes in business processes”. Sue Copeman reviews progress.
The Lloyd's and International Underwriting Association of London (IUA) joint forum has an ambitious aim - “to ensure that London retains and enhances its position as the world's foremost insurance marketplace, by streamlining processes and making full use of electronic commerce to the benefit of customers, intermediaries and underwriters”.
The forum's approach is twofold - making London more attractive and accessible as a market and reducing the intrinsic costs of the industry itself. In order to achieve this, it has identified four key areas for review:
• the payment of claims, the issuance of policies and the payment of premiums - the objective being to ensure the shortest possible delivery time in each case;
• the setting of service standards in some key areas, with the publication of statistics showing the performance of brokers, underwriters and central services measured against these agreed standards - this transparency designed to 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 the London Processing Centre (LPC) and Lloyd's Policy Signing Office (LPSO);
• the promotion and early adoption of e-commerce and electronic trading.
Says IUA chief executive Marie-Louise Rossi, “We decided that our immediate focus and priority had to be London market systems, processes, procedures and practices. We feel that there will be areas here where we will be able to co-ordinate activity.” The forum has already made a start, by establishing a working party with brokers that focuses on common market standards and protocols.
Some brokers may, however, feel that progress so far has been slow. By January 2000, the forum had only just begun to set up its working parties. It will be establishing timetables for these, reviewing progress around March/April and looking to have something to discuss with the market by the summer. Even then, the proposals are likely to represent only a percentage of what the forum will eventually achieve as the task it has set itself is formidable. “Everything about the way we do things will be examined,” explains Ms Rossi.
As part of this analysis, the forum is identifying the desirability of bringing in the experience of other sectors in terms of managing the supply and distribution chains. This could mean looking globally at a number of sectors such as banking, retail, food distribution, airline booking and credit card providers. “There are elements in all those activities that could possibly be useful to look at,” says Ms Rossi. However, she does not believe that other insurance markets have progressed very much further than London in terms of taking advantage of technology “Certainly, if we do find other markets are ahead of us, our intention would be to leapfrog.”
At this early stage in the forum's work, there has been little analysis of the financial impact although this will be an important aspect later. Ms Rossi is unwilling to make predictions as to any possible contraction of employment resulting from the changes. “New technology in the work sector changes the way that things are done. That involves creating new jobs as well as removing the need for others.”
Similarly, she is unwilling to give a view on how risks will be placed and handled in the future. “This involves levels of detail that we haven't come to grips with yet. All I can say is that it will be very different. For example, WISe (formed by the merger of the World Insurance Network, the London Insurance Market Network and the Reinsurance Network) is a supplier not a service provider. That could change. It is highly likely that if we keep the existing installations, we will be making different use of them.”
There is a perennial debate in the London insurance market as to those areas that offer the ability to gain competitive advantage and those where it is better for everyone to co-operate for the good of the marketplace. The success of the forum may rest to some extent on its ability to convince the market that there is more to be gained from a co-ordinated approach than from individual initiatives. With brokers in particular champing at the bit to get new processes and systems up and running to satisfy clients' expectations, speed may be of the essence.
Sue Copeman is a freelance writer and researcher and a director of Insurance Research & Publishing Ltd.