Sarah Kennedy takes a look at the first four years of the electronic commercial trading platform
It was meant to revolutionise commercial insurance trading. After years of research, insurance-owned technology company Polaris, with help from IBM, launched imarket, a shared portal for brokers that would answer the industry’s cry for modernisation.
Four years on, brokers are still waiting. An Insurance Times investigation has uncovered dissatisfaction with imarket’s progress, and Polaris itself has admitted that it may have been naive in its ambitions when it launched the programme.
While it has been on the starting blocks, other contenders have emerged such as Broker2Broker and Xbroker. But the market still lacks a widely-used electronic trading platform for commercial insurance, a major setback in its efforts to join the digital age, the way retail insurance has, through electronic data interchange (EDI).
imarket launched to great fanfare in January 2004. Insurers were quick to hop on the bandwagon with a consortium of six major players – AXA, Allianz, Norwich Union, Groupama and Royal & SunAlliance – immediately pledging their support along with millions of pounds.
The total investment made by insurers into the imarket portal is about £15m, but each company has made additional investments to upgrade internal software systems.
But today, brokers complain that insurers haven’t underwritten enough products to be traded on imarket and that Acturis is so far the main software house fully integrated with the system and offering the most products.
As a result, it’s mainly Acturis brokers that have used imarket’s integrated trading with any degree of regularity.
Others claim to have hit a brick wall with too many referrals or declines by insurers, resulting in brokers having to call underwriters in the end anyway.
“There is definitely a question mark on imarket and until we get the end-to-end solutions there is going to continue to be questions asked,” says Biba chief executive Eric Galbraith.
“I’ve been involved with imarket for a couple of years now and they have done a good job but I think it is taking too long. Insurers have invested a lot of money in imarket and it would have been nice if it worked.”
Stuart Reid, chief executive of Stuart Alexander, uses imarket on a limited basis and agrees it has taken much longer than anticipated for the technology to be all it was set out to be.
“It’s tremendously frustrating that it isn’t further along than it is,” he says.
A source from a large software house claims the numbers of quotes transacted through imarket’s integrated system has been very low.
“In principle, imarket is a fantastic concept,” says the source. “Brokers can go to one place and get access to quotes from various insurers. The problem is each insurer has different data requirements needed to provide a quote. To cover the bases of all the insurers involved, brokers have to fill in massive amounts of information.
“Some brokers said it was quicker to just go to individual insurers themselves. In four years nothing has really changed,” the source adds. “Insurers are frustrated because they’ve invested a fortune and very little business has been traded.
“They are not getting adequate returns on their investments. Software houses have lost money because they have built products in line with imarket.
“The future of imarket will be determined in the next 12 months. It will either step-up and take off or it will just wither away.”
For Jeff Ward, director of IT consultancy consultancy TriSystems, the frustrations people have expressed over imarket and its limitations come down simply to unrealistic expectations.
Ward, who is actively involved in introducing a similar trading system to the London market, says would-be users should never have expected the technology to be a cure-all.
“It’s a shame that some have chosen to promote a system like this as a panacea. One of the strengths of the insurance market is that it is able to transact complicated business through very intelligent people. It’s nonsense to think that computers could replace the need for highly trained and intelligent people.”
“This was never a project, and maybe we were a bit naive, where we were going to just cobble together two pieces of information, press a button and everything would change
Martin McLachlan, Polaris
imarket, he says, should be used to support the face-to-face dealings and a way for brokers to have all data in electronic form
to make life easier down the road.
Though it has its critics, no one has suggested that imarket technology doesn’t work. About 50,000 transactions travel through the portal a month – including quotes and electronic cover notes. But only about 16,000 monthly quotes take place within its integrated system – mainly through Acturis brokers.
Acturis co-chief executive Theo Duchen has been one of imarket’s most avid supporters but is aware of its problems. The point is, he says, it works.
He compares imarket to connectivity platform Kinnect – a similar electronic trading platform set up for Lloyd’s, that ended disastrously and cost £70m.
“imarket could have been a Kinnect,” he says. “The market is littered with failed initiatives. If you consider that perspective, then imarket is doing really well.”
In some ways, imarket is exactly where insurers hoped it would be.
With insurers NIG, Brit, Ace, MMA and Fortis joining the original six, the panel is larger than anticipated and comprises about 90% of the commercial market, says Norwich Union’s Phil Nunn, head of business partnering, Polaris and e-trading.
“imarket works,” he says. “It does all the things we wanted it to do. But do we have the critical mass of brokers we wanted? The answer is no.”
Market penetration is believed to be about 100 to 150 brokers using integrated trading – mainly through Acturis but also, to a lesser degree, through another software house. Other software houses are currently involved in piloting imarket including Insurecom and Open GI.
Nunn does not know if the business generated by imarket has covered the cost of investment.“In terms of the volume we receive, it is consistent with our market share but I believe it could be a lot more and we want to make it more,” he says.
“Returns could be better and we expect them to be better.”
Martin McLachlan, managing director of Polaris, which runs imarket, admits now that the goals they set in getting imarket up and running may have been too ambitious, but is confident that the portal’s popularity will grow. The personal lines portal EDI, took more than a decade to operate smoothly, he adds.
“We may be a little bit behind where we should be. There probably should be more products and more software houses integrated. But commercial trading is relatively new and we perhaps under-estimated the complexity of the whole process.”
McLachlan says aspects such as security have been massive and time-consuming endeavours, along with the integration of software houses, getting brokers on board and having insurers write out their product specifications.
He admits there are aspects of imarket, particularly when it comes to entering data on the web browser, that can be daunting – which is why the company will this year unveil new forms to make the task easier for brokers.
He also says several new covers will be available including fleet and commercial-combined, along with a schemes library that will make it easier for brokers to track down information about niche products.
“We have all the major insurers supporting it and what we’re focusing on next year is about making it easier to use,” he says.
“This was never a project – and maybe we were a bit naive – where we were going to just cobble together two pieces of information, press a button and everything would change. These things take time and as much of a cliché as it is, Rome wasn’t built in a day.”
Although imarket may not yet have provided the revolution the industry anticipated, it seems McLachlan isn’t ready to surrender just yet.
What is imarket?
imarket is the UK general insurance industry portal run by Polaris UK on behalf of participating insurers.
It is an electronic commercial trading platform enabling intermediaries and insurers to trade in a secure online environment.
Brokers can access comparative online quotes for 13 commercial classes including: shops, tradesmen, offices, pubs and restaurants, directors' & officers' and professional indemnity.