Not enough steps on the road to e-market

Should it come as any surprise to hear that the Lloyd's market is stumbling towards business process reform rather than striding, as it perhaps had once hoped?

On past history the answer is no.

While not on the scale of Kinnect's failures, niggling doubts are seemingly setting in about whether good intention can translate into widespread use.

Publicly the leading forces behind the drive to create an electronic marketplace, namely the Lloyd's Market Association (LMA) and the market reform group (MRG), are buoyed by the market's response.

Both groups insist there is a "real step change" towards electronic processing in the market.

But according to market sources the organisations are beginning to feel the heat.

"They are quite sensitive about some of the problems this is creating," reveals one industry figure. "Clearly there are a lot of concerns about the ability of these particular processes to actually deliver."

While efforts have understandably been focused on contract certainty, demonstrated by the fact that by the end of 2006, 93% of contracts were certain at Lloyd's, some believe other projects have suffered due to a lack of time and investment.

The projects in question are electronic claims files and accounting and settlement repository.

Both are operational and according to Richard Ward, have a very positive uptake.

According to official figures, 15% of new claims are being processed electronically with 25% of premium-related documentation following a similar route.

Unofficial figures seem to contradict this, with suggestions that the volume of new claims being processed through the repository has moved on little further than the 220 transacted between December and February.

Particular criticism, however, has been thrown at accounting and settlement.

"Rather than having a full scale development of accounting and settlement and pushing it forward, what the market seems to have ended up with is a key set of principles where there is no compulsion for people to use it," says another industry figure.

"What started out as a cross market drive on money settlement has turned out to be a nice document with little behind it."

The MRG and the LMA remain staunchly behind the work, which makes up one of Lloyd's chief executive Ward's priorities.

While you cannot blame the groups for staying faithful to their task, it appears that despite a lot of clear thinking around what needs to happen and laudable support from the senior members of the market, when it comes down to the practicalities of delivering this others are far less convinced.

David Ballard, consulting services director at IT solutions provider, Northdoor, says: "An area where the greatest uncertainty exists at the moment is the centre-backed initiatives and how they fit in with what G6 is doing in ploughing their own furrow.

"It is also difficult for medium-sized organisations to know where they fit in."

G6 continue to emphasise that it is all about small steps.

"We're never going to get there in one leap; it's about getting started, considering our options, taking small steps and being prepared to invest now to start the process," says Carl Phillips, head of programme management at Amlin.

The small step approach makes a lot of sense and some even claim that this is more of a three, maybe even four year transition.

Once volume increases then surely change will become almost inevitable.

But, as Ward reiterates his demand for all new claims to be processed electronically by the end of 2007, leaving an 85% deficit still to make up, there is a clear argument for widening the market's step if it is to achieve its aim. IT