Lloyd's Market Association's market processes committee chairman Dane Douetil has said that the critical impact on loss ratios could result from initiatives to improve the efficiency of insurance markets globally.

Douetil said that while many analysts were focusing on the cost savings such projects could deliver, this element only accounted for about 3% of a risk carrier's combined ratio.

He pointed out that loss ratios made up some 70% of combined ratios, and could be significantly enhanced if the industry was able to put quality information in front of decision makers in a timely manner.

“The real economics is about getting better information not just at the underwriting stage but also to achieve better reserving, and if we reserve better we can price better,” said Douetil, speaking at the 2004 Electronic Trading Platforms for Insurance conference.

During the session, Douetil also stated that due to the wide variety of businesses within the London market it is unrealistic to expect to create some kind of ‘one size fits all' big bang approach to such initiatives with everyone coming on board simultaneously.

What is needed, he argued, are solutions that accommodate both early and late adopters while rewarding the early adopters and adjusting for the cost advantages that would otherwise flow to late adopters.

Douetil is deputy group chief executive of Brit.

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