The London market has always had an enviable reputation for imaginative and innovative underwriting. Its very structure, with a high number of relatively small and flexible firms, has enabled it to deliver a range of covers simply not available anywhere else in the global marketplace. However, on the other side of the coin, it has a less enviable image for sluggish back office processes and protracted claims settlements. In today's highly competitive insurance industry such criticisms are unacceptable, and they threaten to erode London's position as a leading market.
In recent years, strenuous efforts have been made to address these concerns and to take the important and necessary steps towards streamlining operations. The most recent focus of these labours has been through the establishment of the International Underwriters' Association (IUA)/Lloyd's Forum. Many months have been spent looking at challenges facing the market and a range of proposals have been put forward in a consultative paper. These were subjected to a rigorous examination and consequently modified, refined, clarified and polished. Now all the talk is over and the time for action has arrived. Market players have begun signing up to the final scheme and are looking at how to implement changes within their own organisations. This may well prove to be a much more significant process than the general agreement to broad principles about how the market should operate. It will consist of individual organisations and managers reassessing how they work on a daily basis, how they can save costs, and how they can improve efficiency.
The key question is likely to be how to share information and data with business partners in a more efficient and effective way. Insurance is an information intensive industry and the development of new e-commerce technologies has provided it with a real opportunity to improve service, cut costs and move toward meeting the IUA/Lloyd's Forum challenges.
A new approach
Services such as those provided by insurance software specialist Rebus iS offer both underwriters and brokers the opportunity to utilise the very latest developments within their working practices. Its latest software solution, WorldView, is central to a new service just launched called Rebus Exchange.
WorldView consists of two separate solutions integrated together – WorldView portal and WorldView knowledge. The portal is designed to deliver a ‘working day' through a single web page. It combines a number of different applications, information and people on a single web interface, aiming to dramatically reduce desktop organisation tasks. External intelligence feeds can be easily established, as can the link to WorldView knowledge, which manages internal and external access to the company store of information.
Internally, an organisation might use these solutions for providing information to dispersed team members, or sharing information on, for example, work in progress or upcoming renewals. Details of placements, endorsements, claims, wording agreements and surveys may all be kept on a managed repository service for easy access by any employee. Powerful search facilities allow any of the data stored to be accessed quickly and easily. Once a user is on-line, real-time chat and discussion facilities are available and staff can maintain the content within their own home pages, effectively providing a personal portal.
Managed externally to an organisation, the same facilities can be used to communicate and share information just as conveniently with business partners, or even, if the situation demands it, competitors. The recently launched Rebus Exchange is a virtual private network (VPN) that can support such an externally managed solution. Built around a fibre optic network, the Rebus iS initiative uses Cisco routers to interconnect users and services. Immediate benefits to subscribers are the cost savings derived from running multiple data sources over a single line, whilst having free, unlimited access to the internet. The real value of the VPN is its ability to host applications, and a managed repository service using WorldView is planned in the near future. One immediate advantage of linking up to a centrally managed repository service is that it removes the need for underwriters and brokers to worry about their own information technology (IT) provisions. Responsibility for the service is by definition in the hands of someone else but still secure with appropriate audit trails. By having a single central system, communication processes can be greatly simplified. The need to copy files to floppy disc or attach them to e-mails is eliminated, as those who need access can be granted permission to view or edit information as required. Rebus's sales and marketing director, Gary Lowrey, commented: “You would simply log on and be able to access whatever you need straight away. It makes it considerably simpler compared to present methods – there are no documents and files flying around the network, just one copy shared by whoever you decide has authority to access.” He added: “The potential for cost savings lies fundamentally in the removal of any need for significant internal IT support. Required equipment at the user's end is minimal and therefore relatively inexpensive.”
Another advantage of WorldView and Rebus Exchange is the security it can provide for a company's e-commerce activities. All information in WorldView is contained in a secure scaleable repository within an industry strength database. There are a number of permissions and notification features aimed at ensuring only authorised individuals and business partners can access relevant areas. The notification engine also ensures that the correct people are notified when appropriate events occur, for example, the reading and updating of a document. With cyberfraud on the increase, such security features are essential in establishing the confidence required for systems wishing to be fully embraced by the London market. “Strong audit control is a very important element, as is the requirement for reliable back-up systems,” said Mr Lowrey. “In addition, highly secure firewalls are the only way to provide the necessary assurances in terms of the level of security, making it practically impossible to hack into the system.”
Portability of such systems is becoming an increasingly important consideration. WAP technology means that it is now no longer necessary to be in the office to do your office work – users can gain access from any personal computer or WAP device, regardless of their location.
As part of Rebus Exchange, the managed repository service is aimed at small to medium-sized enterprises within London's financial sector. Although not exclusively designed for the insurance market, it is here that the primary focus is likely to be, as the industry is ideally suited to its advantages. It has been introduced at an opportune time as it is designed to tackle many of the issues outlined in the IUA/Lloyd's Forum's London Market Principles 2001 report. For example, there could easily be simple rule-based slip creation software. On another subject, wordings may need to be changed several times until a final version is agreed. A managed repository service can provide the necessary detailed records and make them available to all those that need to be involved in the redrafting and agreement process. According to Rebus' customer support manager, John Bobin, “You will be able to see exactly who has changed what and when they changed it. There will be no argument over what an underwriter has been shown because there will be a record of what was seen. Of course, such changes can be recorded now. The difference is that they can take a great deal of time and effort as brokers visit each individual underwriter who signed the slip.”
Business user friendliness is quite key in these developments. The user should not have to think about how to use the system too much. “WorldView has been designed with the user in mind,” commented Mr Bobin. “Our experience in the field of financial services ensured that we designed a product that is easy to connect with, and delivers the performance which our clients expect.”
An early application will come in the field of claims handling – traditionally one of the areas where the London market has performed poorly in comparison with others in the international insurance sector. “For example, in a claims environment, copies of documents might need to be made available to loss adjusters and lawyers as well as brokers and underwriters – anyone involved in a claim could have all the information readily available. There is an opportunity for them to see all they need whenever they want. It would not be surprising for an organisation to see a halving of IT costs,” said Mr Bobin.
In estimating a reduction of IT costs, it is not just the elimination of a comprehensive need for an internal IT support department, but also a reduced need for the management of telecommunication networks. The development and uptake of such models within the London market is in future likely to be looked back upon as a real sea change in the industry's attitude towards the e-commerce revolution. Until now, many initiatives in this field have consisted of little more than transferring small parts of existing business online. Much e-commerce investment is going into more immediately recognisable marketing and sales vehicles while little has so far been spent on updating back office processes.
Prompted by the debate within the IUA/Lloyd's Forum, a more fundamental and complete rethink of how business is transacted is taking place. A number of industry experts have already predicted that, during the next year, the market will pass a threshold beyond which sustained e-commerce hypergrowth will be experienced.
As always, the proof of the pudding will be the extent to which the London market embraces such opportunities and is prepared to alter traditional working practices, which in some cases, have been around for centuries. The London market is at a crossroads where it knows that it has to improve its competitive global position to maintain and grow its share of international insurance business. Cross-market initiatives such as the IUA/Lloyd's Forum, the development of new services within the WISe community, the coming together of the IUA/Lloyd's bureaux under a joint venture with Xchanging and the development of lloyds.com will have a huge impact upon the London market. Innovative e-commerce products and managed services developed by industry specialists such as Rebus iS will have a major part to play in the future development of the London market as a respected world player.