RI3K chief slashes prices as he warns of imminent torrent of electronic activity
Electronic trading will shift dramatically in the London market by the end of 2006, according to Alex Letts, chief executive of technology firm RI3K.
Letts has predicted that e-trading will transform from a "trickle to a torrent" after global broker Aon announced that it is to move to a full electronic trading capability for its specialist insurance and reinsurance businesses.
He said: "This is the biggest news the market has had on electronic trading. With Aon having around a quarter share of the market, the London market will go from one that has struggled to come to terms with electronic trading to one where at least a quarter of its business will be done electronically by the end of the year.
"It certainly is a moment of truth for the industry."
As a result of Aon's decision to trade electronically through RI3K, the technology company has slashed its prices by 80% for underwriters using its electronic platform.
For all risks bound on the RI3K marketplace after 1 August, underwriters will be charged only £50 per line. The previous charge was $500 (£275).
There will also be a £10 fee for each endorsement.
Letts said: "Last year we made a commitment to the market that as volumes grew we would work towards a £50 price point. Recent activity around broker distribution has allowed us to bite the bullet and make the move in a single step."
Letts said that the price cut was not about attracting business but fulfilling the commitment he made to the market a year ago.
RI3K's Marketplace creates Acord standard data around the placement process for all types of reinsurance risk. Direct insurance will be tradeable from September.
Letts said: "We are working within the Felix framework to hand-off the data electronically to XIS.
"We would encourage companies to speak to us about how to receive this data electronically to reduce their own processing costs."
Felix is a framework that guides the development of commercial components and services that companies such as Xchanging and RI3K build.