The placing of reinsurance business electronically is probably the most prolonged quest for a Holy Grail since the Knights of King Arthur, argues Jeff Ward.
The London insurance market is among the last to convert to electronic trading – banking, the stock market, oil, commodities and metals all swapped during the past three decades. Even the market’s retail cousins have been e-trading for years.
It’s not for want of trying, with many well-documented attempts culminating now in an electronic messaging standard that actually can do the job. Successfully piloted by a group of managing agents and brokers, the broader take-up of this variant of the ACORD placing standard will be aided by Lloyd’s with its proposed creation of the Lloyd’s Exchange, a messaging hub, to make messaging easier.
But will it work this time? History shows that the London market has a marked resistance to electronic change. The age-old argument that “my business is too complex to place electronically” is consistently trotted out Canute-style.
It most probably is. But the nub of this issue is that nobody is actually proposing that the face-to-face interactions of the market be replaced by a computer. The messaging and the electronic paraphernalia surrounding it are there to supplement, streamline and help workflow the process, not to replace it. Messaging is about delivery and control of data and documents – it is not about disassembling a process that works and rebuilding it so that it doesn’t.
So, the next time you hear someone using that excuse to hold back the tide, please tell them that they have missed the point as there is nothing so complex that can’t be placed electronically because “place”, in this context, means “deliver”. It is no more sinister than that.
Jeff Ward is business development director of TriSystems, specialists in London market reform technology.