A new trading exchange launched this week will deliver up to 20% cost savings across the $100bn (£68.8bn) reinsurance market over the next two to three years, says RI3K's chief executive, Alex Letts.
The RI3K system will slash back-office costs for buyers, sellers and brokers by allowing much of the complex accounting, processing and claims management to be linked automatically to the original electronic transaction.
“What this offers is a trading platform where large sums of money can be dealt over an exchange. Brokers and underwriters can trade straight on to the system.
“In reality, anyone trading will spend the first year or two coming to terms with the interface,” he said.
“But RI3K will deliver 10% to 20% genuine cost savings over the next two to three years.”
He believes other e-commerce solutions based on disintermediation had so far failed to deliver and that the internet only “facilitates” those who wish to bypass intermediation.
“RI3K savings will be achieved by streamlining processes, not by attacking intermediaries. This will cut the cost of every transaction, not just of those 50% where there's a broker involved,” he said.
Cash settlements will be provided through Citibank and the system should help improve cash management across the reinsurance market.
The service will be free to anyone who registers between January 1, 2001, and January 1, 2002.
RI3K will take only a transaction fee of 0.5%, on a $10,000 (£6,800) cap.
The list of clients spans the entire industry – from Everest Re through to the whole of the Lloyd's Market.
Lloyd's chief executive Nick Prettejohn said: “Lloyd's has always supported e-commerce as a way to drive efficiency into the market.
“The exchange, which has liaised closely with Lloyd's during the past year, starts to bring those double-digit cost savings into reach.”