Xchanging was a trigger for the review because it has a pivotal role in the market, says Elliot Lane

The Lloyd's claims strategy review has caused quite a stir in the market. Managing agents are being shown the presentation that was leaked to Insurance Times last week.

Reactions have been positive, but the article caught a few Lloyd's executives off guard. Why? Because it named Xchanging as the main trigger for the review when in fact it is costs.

Lloyd's spends over £500m a year in ancillary work for payment of claims, in lawyers, accountants, systems and claims handlers. If this review can shave just 1% off this bill, the market is looking at millions saved.

Led by Nick Prettejohn, the franchise reforms are being pushed forward cautiously because, though 2004 figures to be published in April will be record breaking, the market has a long way to go before it becomes integrated and efficient.

With Kinnect and Xchanging vying for supremacy in the market, the poor broker is left wondering where to turn, and counting the inevitable cost.

Lloyd's head of reinsurance and claims Jeremy Pinchin will carry out a nine-month assessment of each business case and then look for integrated solutions.

The franchise structure was first built to improve the underwriting performance of the market. This has been proved by the swift action taken against GoshawK, Dex and Rupert Villers' proposed PI specialist SunRise.

So the natural extension, according to Lloyd's sources, is that its remit should be widened to see if new methodology can be applied to claims processing.

This is why Xchanging has been mentioned as one `trigger' to the review, because its role in the market is seen as pivotal.

Clive Buesnel, who now controls XCS and XIS, has been invited to join the steering group and told Insurance Times that he welcomes Lloyd's intentions and is happy with the wording of the presentation in the context that this is a full review of the market.

Xchanging's operational controls have always been there but, under Buesnel, a concerted effort has begun to engage the market in debate.

Its seems Pinchin also invited Swiss Re's claims strategist Rick Murray, who is causing major conniptions among managing agents and Lloyd's alike, to discuss its reticence to pay certain claims (see news pages).

Maybe Pinchin is trying to pick up some tips, but generally the market knows he has a tough, unenviable job, but someone has to do it.