Prettejohn calls on market to support platform
Lloyd's has spent £40m so far on the Kinnect project, with provision for a further £15m outlay in 2004.
A source close to the project said the connectivity programme, formerly known as Project Blue Mountain, is draining franchisor funds with no sign of when the market can officially start trading on the system.
"Though Lloyd's said in its accounts last year it spent £20m on the project, the overall cost of changing its name and direction three times has meant the costs are mounting," said the source.
As Insurance Times reported in January, the project's costs are estimated at around £5m per quarter, leading to a debt of at least £50m by the time it can build a significant revenue stream based on access fees. This will be around the end of 2004, Lloyd's has said.
Two weeks ago, as it announced plans to scrap the 2% premium levy at the end of 2003, Lloyd's also said that a 0.1% portion of the members' subscription for 2004 will cover £15m proposed funding for Kinnect.
Lloyd's chief executive Nick Prettejohn told Insurance Times that he was not sure whether the provision would be spent. "We will just have to see how the project develops," he said.
Prettejohn swung his weight behind the project in his CII conference speech last week. He called on the market to make an "effort of will" to bring change and cut costs.
"The Kinnect platform provides a permanent audit trail of all transactions, correspondence, changes and timings, which helps to reduce the E&O risk... Kinnect should reduce the cost of access to the Lloyd's Market."
Brokers Marsh and Willis have backed the project, but sources indicate that both are finding the slow progress "frustrating". Prettejohn said he was not looking for new broker partnerships at the moment.
"I am happy with the partners we have got," he said.
Around 45 people have left in a "downsizing exercise", said the source.
A Marsh spokeswoman said the company would not comment.