Qatar Insurance Services plans to take its new market from manual slow to electronic fast. And it has the advantage of no legacy to overcome, writes Lynley Oram.
Lloyd’s and Swiss Re are taking London and Europe into a sort-of technological pole position with the data messaging hubs they plan to launch later this year. These could embrace the market (initially regionally, but eventually internationally) by connecting a variety of different electronic systems, gateways and e-trading platforms.
It is noticeable that talk about the (re)insurance market’s move to electronic trading is nearly always couched in qualifiers such as “possible”, ”can” and “expected”. Nobody is quite sure whether the deeply conservative market will accept change, and many of those involved are unsure how many of the complex transactions that take place can be transferred to electronic processes.
But move a little further east and the view is markedly different. In Qatar the talk is not of “can” and “might”, but of “will” and “when”. There is a confidence and a sense of adventure: a complete infrastructure, from the buildings to the communications and IT, is being designed specifically for purpose.
James Sutherland, the recently-appointed CEO of Qatar Insurance Services (QIS) describes Qatar’s approach to doing business as: “Quiet, but adventurous.” It is not surprising, therefore, that the next technological development to affect the (re)insurance industry is expected to come from here.
QIS is a wholly owned subsidiary of the Qatar Financial Centre (QFC) Authority. Set up three years ago, the QFC is a financial and business centre in Doha that is aiming to attract international financial services institutions and major multi-national corporations. The QFC Authority is the commercial, administrative and legislative body responsible for driving the commercial strategy. It says that the QIS “will provide a very solid foundation for Qatar’s objective to become the region’s leading insurance and reinsurance centre”.
The QIS system is based on the eReinsure platform, is web-based and ACORD compliant. The board line-up for QIS is impressive. The chairman, Abdulrahman Al Shaibi, holds a senior position within Qatar Petroleum, is a member of the Qatar Finance Policy Committee, and a board member of the QFC Authority. Non-executive director John Coomber is a board member of Swiss Re and was previously CEO of the company. Leonard Schrank, CEO of ACT3 Technologies LLC, was CEO of Swift (Society for Worldwide Interbank Financial Telecommunication). Schrank, who describes himself as the only non-insurance person on the board, comes to QIS from an information services perspective and likens it to a “Swift for insurance.”
He prefers to use “electronifying” to describe the move towards digital systems. “This is not going to be one big bang, rather [it is] a re-engineering of the processes already in place. Right now cedants, reinsurance brokers and others are using email and telephoning. There’s a lot to remember and keep track of. QIS is aware of the process and where you are in the process. There is no need for faxes or emails. [It is] moving from the manual slow, to the electronic fast.”
QIS will be rolled out in three stages. The first covers placement, the second accounting and settlement, and the third claims. By contrast the Lloyd’s hub will focus only on placement, and the Rüschlikon Initiative on accounting and settlement. Although it is believed that both hubs will eventually merge, neither has quite the same breadth as QIS.
The first stage of QIS will go live in June. Stage two is expected to follow in the year, depending on the feedback from the user group.
The system can also be used for negotiations. “It is possible to put in a proposal and have the other side come back with a counter proposal,” says Schrank. “It has made the process of going back and forth very easy and intuitive. Quotes can be requested one to one, or one to many, without duplication,” he says.
QIS was built with a regional, not a global, market in mind. However, there’s no reason why it couldn’t eventually tie in with other systems such as Lloyd’s or the Rüschlikon Initiative, or any other hub based on the ACORD standards. Schrank believes that over time all systems will integrate.
Sutherland says there is potential for information exchange between hubs. ”But that is not on the agenda at the moment. Currently we’re building the demand side. Then the supply side will use the system as well. QIS will support existing trading relationships. It will be doing what the industry already does, just in a more structured and efficient way.”
Sutherland isn’t too worried about resistance to a new way of doing things, a concern that dominates discussions about electronification in London. “We’re not working in a London [type] market; we’ve no legacy of slightly archaic processes. I think it [QIS] will succeed. No legacy to overcome, and we’re backed by Qatar government so we can take a long-term approach,” he says.
Lynley Oram is a freelance journalist