Failure to reach 60% uptake of A&S repository raises questions of data quality
Lloyd’s brokers and insurers will fail to meet a key target in the market’s electronic reforms, raising the possibility that sanctions will be levied against companies, Lloyd’s sources said this week.
The market is set to miss its target of achieving the required 60% uptake of the accounting and settlement (A&S) repository by the end of September.
But questions have been raised about the quality of the data being used to measure the market’s performance.
A senior market source said: “Lloyd’s view of people’s performance differs from its own and the reconciliation is underway.”
The market’s failure to hit its third quarter target for adoption of A&S could trigger action by Lloyd’s.
Lloyd’s chief executive Richard Ward has warned that he would consider forcing them to use electronic process if the pace of reform is not quick enough.
Other sanctions, such as imposing capital loading on poorly performing syndicates, have also been threatened.
In July, Ward said that mandating the use of A&S and electronic claims files (ECF) was “only necessary if take-up has not accelerated by the end of the third quarter”.
However senior market sources said that Lloyd’s was likely to wait to see if the full year targets were met before taking action.
The adoption of the electronic A&S repository and the use of ECF are key parts of Lloyd’s modernisation.
“We cannot miss this opportunity to modernise. While progress has been made, the franchise board is committed to taking firm action, where necessary, to accelerate change
Richard Ward, 11 July
Quarterly targets for the use of A&S and ECF have been set for the market (see box).
It is not clear how far short of its third quarter target of 60% use the market has fallen. It is understood that that the target for ECF use has been met.
The franchise board will publish performance figures for all Lloyd’s brokers and managing agents at the end of September.
At the end of the second quarter the market’s take-up of A&S was 17%. Its target was 40%. Meanwhile, the take-up of ECF was only slightly below its target of 30% at 28.5%.
Mike Barwick, project manager of the London Market Brokers’ Committee, said: “We are encouraged by the number of firms which have implemented A&S and ECF during 2007 – the challenge now is to raise volumes. The targets set by the Market Reform Group were always going to be very tough to achieve.
“There are a variety of issues which explain why these targets haven’t been met and brokers, insurers and software suppliers are actively tackling these now. Sanctions will only be effective if the low volumes are the result of apathy – we do not believe this is the case.”
Lloyd’s declined to comment.
Market Reform Group targets
A&S repository targets
2nd Quarter: 40% (17% achieved)
3rd Quarter: 60%
4th Quarter: 80%
2nd Quarter: 30% (28.5% achieved)
3rd Quarter: 60%
4th Quarter: 100%