Cedants, reinsurers, brokers and technology specialists recently gathered in Brussels to work out the direction industry systems should follow. Sarah Goddard spoke to some of the delegates to the meeting.
The re/insurance sector has not been covered by glory through its uptake of technology and systems. Over the years, a number of initiatives such as the electronic placing system (EPS) in the London market have promised to streamline processes, improve accuracy and cut costs. But none, so far, has made the grade.
Instead, a plethora of different systems solutions have developed piecemeal across the industry. Intrinsic problems with this type of development became glaringly obvious during the M&A boom, when companies found themselves saddled not only with legacy systems, but also with incompatible systems. And in a business noted for its international and risk-sharing nature, the incompatibility between different carriers' systems slows down the process and can often lead to errors.
Initiatives by the Association for Cooperative Operations Research and Development (Acord), the US-based non-profit standards development agency, have provided a framework for data standards, and more than 1,000 carriers around the world support their initiatives. Nevertheless, there remains a discord.
To this end, technology company ri3k in June brought together around 30 industry representatives to discuss the issues at a 24-hour roundtable event. "We tried to get representatives from the business side and e-commerce side, so they could sit and talk, and get them to agree on what they want to achieve," said Alex Letts, chief executive of ri3k. "We united brokers, reinsurers and cedants from the top level in each sector," he commented, "and we also invited inreon, lloyds.com and technology platform providers."
One of the delegates was Craig Patterson, director of group reinsurance operations at UK composite Aviva PLC (the former CGNU). For him, participation in the event was an opportunity to try to explore the way forward in a consensual environment. "From our perspective, we've been quite keen to see a more collective response from the industry," he said. "We have seen a lot of initiatives start and fall away. This was getting a number of component parts together."
Charles Myrtle, divisional director of the marine division of broker Willis, also attended the meeting. "We take the whole development of e-business technical solutions very seriously," he said. "We wish to be at the vanguard in the change of industry practice." At the same time, the industry did need to collaborate on these types of issues, he said. "As an industry, we've been incredibly good at not sitting down and developing. Those of us involved in new areas know we've got to get people talking and get senior management to look at it, and people on the shop floor buying into it."
Jurg Raschle from the Zurich office of PartnerRe said that his organisation kept a constant eye on the trading platforms offered to the re/insurance sector, though "we are not working on all possible platforms." PartnerRe was committed to inreon and subscribed to Catex, he said. The reason PartnerRe decided to participate in the roundtable was that "we are interested in looking at the evolution and development of these platforms. We want to be informed with what is happening ... this fits perfectly with my thoughts."
Tony Illinesi, the services manager, London market with technology company CSC said the feeling of the meeting "was very much, how can we make this work." Participants were "vocal and proactive with their views," he said, at the same time praising ri3k's role as a facilitator. "They didn't `buy' the meeting in any way - they made it very clear at the beginning that they were there just to promote the exchange of views."
With the neutral venue of Brussels as the chosen location for the meeting, participants were given a fairly free agenda to discuss what they wanted, both in sector groups and across the industry. On the buyers' side, "we all found a consistency of problem," said Aviva's Mr Patterson. "We have all got the same sort of issues in our organisations; if we take away the strategic issues and look at process, we have all got similar problems." These, inevitably, are centred around the collection and quality of data. "Most people are focused on the trading transaction," he pointed out. "But the process after the transaction is just as important."
"We have to distinguish between in-house or industry platforms for administration and e-business tools to promote products and generate more revenue," pointed out Willis' Mr Myrtle. "When you talk about the costs of these things in the past, there was a lot of money spent and no value delivered."
In the wider business arena, many sectors were "caught up in the hype at the end of 1999," he said, producing internet-based marketplaces and exchange models with insurance solutions tagged on the back. "The risk was of damaging our brand and relationships - the models were fantastical," he said. Now the market has calmed down, but he said he felt it was "unfeasible" for one organisation "to provide the holy grail of end-to-end solutions." Nevertheless, the mood has changed and now, "to get people to used (it), there has to be real identifiable value."
Interestingly enough, the consensus across the meeting was that an exchange which facilitated data transfer and applied data to in-house systems was the ideal. This in itself could cause problems: data standards are still not as widespread in their use as they could be, and the re/insurance sector is notorious for the variation of its wordings. Nevertheless, one or more administration hubs to interlink the industry emerged as a front-runner in the evolution of systems in the industry. What probably emerged as the winner, though, was the spirit of cooperation that permeated the meeting. "There was a general willingness to share ideas," said CSC's Mr Illinesi. "The roundtable created a dialogue between parties - we had good discussions, shared ideas and saw what others were doing."
PartnerRe's Mr Raschle felt that "one of the interesting things of this meeting is that we realised a lot of market participants had the same interest, and similar goals... one of the best things about the meeting in Brussels was that people got together and talked."
An overriding reaction from delegates was an enthusiasm for the original initiative, and for continuing the exercise. By sharing ideas and problems behind closed doors, in a neutral environment, participants discovered that many of the issues and problems were identical in different organisations. Already, a follow-up meeting is being organised, and certain delegates have formed an informal group to continue the discussions.
But, finally, can it make a difference? The momentum created by the first roundtable is impressive, but how can it be maintained? "A lot of these things get down to the individual desire to see change," said Aviva's Mr Patterson. "It is about people in the organisations who want to see change occur."
By Sarah Goddard
Sarah Goddard is the editor of Global Reinsurance.