After the blind alleys and false starts, some easy technology wins are needed by the London market, says Roger Foord
"Most people are in favour of progress, it is the changes they don't like". A good anonymous quote for the London insurance market!
A fallacy about London is that the global insurance and reinsurance market is way ahead of London with its technology. This is just not true, and the central accounting and reconciliation system used in London, and now run by Xchanging, is something the global market outside of London would 'gag' for. I hate to think how much money is washing around the world unaccounted for; it would make a global FSA salivate.
London is well served by its central accounting system. However, the XIS systems are still in the dark ages when it comes to their dealings with brokers. With all of the electronic accounting information and the electronic claims agreement system, Class, the way the brokers and XIS interlink is almost criminal.
All brokers have to pay their premiums from their clients to underwriters on the 'slip'. To do this they send a piece of paper called the PAN (premium advice note) manually to XIS, which then in turn manually enters this information into its own central system.
The bureau at the same time enters a precis of the 'slip' and also details of the underwriters on the slip.
Apart from the slip information all of the other information is held in a fixed electronic format by at least 95% of London brokers. The time which could be saved by doing this with electronic files, even with Acord standards, is monumental.
And the good thing is it does not affect the face-to-face business of the market.The fact that this has not been solved, and quite frankly probably will still take years to move on, is mostly the brokers fault because of their historic need to control the flow of cash from client to London underwriter.
Anything to speed up this process has been politically slowed down.
The savings to the market central processes are obvious but only if you have a passion for such things.
Just a few benefits are no duplication or risk of error by the bureau for underwriter's references: no time wastage by the PAN being rejected by the bureau, unless for genuine errors (the latter would speed up payments as XIS currently have a rejection rate of 30%): more accurate information from XIS to underwriters: less cost for transporting the brokers paper documents to Chatham and Folkestone for manual checking and data collection.
While the higher echelons of the market have decided to kowtow to the FSA about the ability of the market to provide other non-essential changes to its practices, it is missing some sublimely easy, money saving, time enhancing, no-brainer opportunities.
Maybe the new head of Lloyd's will see some advantage in getting easy wins for London over its competitors. All major brokers should lead the way and get this money saving, time improving, accuracy enhancing system into gear as soon as possible.
The good intentioned new faces on the Lime Street block who want to save brokers from making monkeys of themselves, by relieving them of their arm enhancing broker files appear fairly regularly, but not always for long. This is not to say that their presence is not appreciated it is just that they have not understood the nuances.
So the current efforts to bring some semblance of IT order to a market which actually provides quite a good service are under the kosh because they have allowed themselves to think that they have solutions to a non-problem.
These are changes which put no pressure on placing brokers and underwriters, but which would provide the market with another cost benefit of doing business in London.