Even the robust players are vulnerable to the peculiarities of the current downturn in e culture.

The ‘e' explosion of two years ago has taken a significant dive recently, particularly over the past nine months, leaving only the serious players. But even they are looking potentially vulnerable in the current climate, and only those with future funding in place are not exposed to being suddenly abandoned or forced to find new venture capital backers.

The prevalence of potential supporters is not looking good at the moment, therefore there is a fair amount of dismay surrounding those e-solutions which are still only partly developed or which are not yet bringing in any significant income.

Novel ideas
The insurance market has had its fair share of novel technology ideas which have finished up on the scrap heap.

This does not necessarily mean that they were bad ideas, but indicates more that they were not able to withstand the downturn in the financial markets, particularly in technology stocks, before realising their potential. For those that have survived so far, cutting back on costs, expensive accommodation and staffing numbers has been the norm, but this is not enough for financial backers. Good results in terms of volume of transactions and therefore profit will soon be demanded if funding is going to continue.

It is still unclear whether the financial bubble has burst for all of the initiatives, but this will become apparent as they try to encourage business for any sites or exchanges.

Incomplete initiatives are likely to need to finalise their development in a more cost-effective way, which will mean reduced staffing and moving to more cost-effective locations.

Swiss Re's sigma produced a report last year looking at the implications for global e-business in insurance and came up with some interesting points, although it was published before the downturn in the credibility of the internet.

The points which emerged included:

  • lateral entrants from other industries can provide new competition for insurance;
  • e-business lends the ability to provide 24x7 service globally;
  • it can lead to the reduction in cost of large distribution systems; and
  • success depends on the volume of information required to provide a rate, for example personal lines quotes compared to Lloyd's slip commercial business.

    On the downside, competition from new entrants via the internet route comes from organisations without ‘known brand' status and not always possessing in-depth expertise and a history of taking the rough with the smooth.

    In general there have been specific areas which have attracted e-business. These are:

  • company web sites for product marketing;
  • product portals;
  • aggregators (insurance brokers);
  • risk markets;
  • reverse auctions for insurance demand; and
  • personal and small commercial direct insurance.

    From the London insurance market's perspective, internet technology is still not viewed as appropriate for the quotation and placing of risks. However, with the London bureaux systems – the London Processing Centre and the Lloyd's Policy Signing Office – being replaced by a single body in Ins-Sure, there is the thought that a commercial perspective might prevail. From this point of view, web-enabled databases of wordings and electronic interfaces to monitor a reformed claims process, together with proposals to improve the standards of claims and premium settling are promised.

    Even then there is some doubt as to whether everybody thinks that London's current systems are actually broken and need fixing. For some, it is more a case that they purely need a few tweaks.

    Even if there is no comprehensive placing system, there is no doubt that after the success of electronic claims systems in London, developed innovatively in the late 1980s, the development of a similar system for endorsements is long overdue.

    E-mail for endorsements has started to replace the brokers' current system of sending out individuals to visit all the underwriters, queue up in their offices and wait for their ‘scratch'. This is far from being a proper system and has no means of automatically attaching the endorsement to the original paper slip.

    London's reluctance to embrace change at the placing stage, a preponderance of legacy systems and a historic failure to collate the volumes of information and data that the industry creates, has meant that internet technology has been slow to revolutionise the industry.