The Lloyd’s director of market development aims to dispel the myths about the London Market’s electronic message exchange, and says it is no longer fair to accuse Lloyd’s of being slow to embrace technology
Q: How has the Exchange been received?
A: We went live in the marine area, perhaps one of the more traditional and more challenging areas. But the users were great. Yes, there was a lot of feedback on things that could be done better, but that is to be expected from a pilot. The good thing about the mariners group is they knew they were bleeding edge and they were learning the lessons for other classes down the line. They took that very seriously and came up with various changes they wanted to see.
There are 15 key changes that are being put in place between now and October. Those changes are not around the Exchange, they are around the way the process works. The interesting thing about going from paper to electronic is that new issues start coming out of the woodwork. A lot of things need to be clarified because it is a new way of working.
The only feedback we felt uncomfortable with was saying the exchange is not good for negotiated endorsements. Our point on that is that it wasn’t meant to and it never should be, because this is about placement support, it is not about replacing face-to-face interaction. There is no reason, once you have it negotiated, why a message can’t go to the Exchange. But don’t try to use the Exchange to negotiate – that’s not what it’s there for.
I don’t think that message is fully out there yet. People still seem to think the Exchange is a ‘Kinnect’ [the ill-fated trading platform Lloyd’s closed in 2006] or a placing tool. It is not. It is an information relay that supports the way the market works.
Q: From July, three more lines were added to the project, with all lines to be live by March 2012. Is this too ambitious?
A: We expect a slow ramp-up. It is a balancing act. If you go too fast, you’ll break it and it would be too ambitious, especially with Solvency II to contend with. But if you go too slow, it’s hideous having two ways of working, and people will ask: ‘Is it going to work or not? Are you going to continue or not?’ So you have got to have an end date. Our end date is March 2012.
Q: You still hear criticism that Lloyd’s is slow to adopt technology. How fair is that?
A: It’s not fair now. Technology is being adopted far more quickly. I have seen a change from accounting and settlement to the electronic claims file, to the first part of the Exchange to this stage of the roll-out. Each time the resistance is less.