The pace of Lloyd’s market reform is increasing with several groups developing their own electronic initiatives, and a crackdown on firms that miss implementation targets. James Dean reports
The announcement last week by Lloyd’s Market Reform Group (MRG) that the electronic claims files (ECF) target was missed brought electronic reform targets into the spotlight once again.
But while meeting targets is necessary to bring under-performing Lloyd’s firms up to speed with electronic reform, it is not the only reform driver.
As was seen with the external group of six (G6), and now with the big brokers, market reform must also be driven by individual companies that participate in the market.
Electronic placement, electronic claims files (ECF) and electronic accounting and settlement (A&S) systems are currently the three key areas in which developments are being made. ECF and A&S reform is overseen by the MRG while companies are left to choose from a variety of electronic placement systems.
“The big bang approach will not work: we saw that with Kinnect,” MRG chairman Dane Douetil said this week in a speech to the market. “Bite-size chunks guided by standards and frameworks are necessary instead.”
The MRG plays an important part by setting targets, as well as leading on other important reform drives.
Sue Langley, director of market operations and North America at Lloyd’s, and a member of the MRG, said she would now begin visiting managing agents that have missed the latest targets.
“Businesses that are slow to adopt ECF and A&S are letting down the market and could potentially undermine the progress that we are making
Sue Langley, Lloydâ€™s director of market operations
“Businesses that are slow to adopt ECF and A&S are letting down the market and could potentially undermine the progress that we are making,” she said.
But, ultimately, reform will be completed only if reaching targets set by the MRG are coupled with successful reform drives by individual companies.
Kinnect tried and failed to provide a single market-wide solution. So the market was left to develop a broader range of solutions, and integrate them. Individual companies were left with more flexibility with electronic placement.
Thus, companies are looking to tailor their systems to suit their own business needs under numerous frameworks – for example, the Acord London roadmap which most major companies subscribe to.
Because of this ‘one size does not fit all’ approach, there has arisen a dizzying array of IT companies offering their services to the market, ranging from consultancy and advice to software and hardware provision.
But because of the number of competing service providers, offering so many products, companies have been free to push ahead with placement reform faster than their competitors.
It is here that advances must be recognised, in tandem with the advances made in hitting the MRG targets.
Missing the reform targets
Last week, the Market Reform Group (MRG) made public the figures for electronic claims files (ECF) and accounting and settlement repository (A&S) uptake for the third quarter. As expected, A&S uptake was behind schedule (36%, compared to the 60% target) but ECF uptake, previously thought to be on target, was not (45%, compared to the 60% target).
As a result, Sue Langley, director of market operations and North America at Lloydâ€™s, and a member of the MRG, is visiting managing agents that are missing their targets, in a bid to get them up to scratch.
â€œCompaniesâ€™ use of ECF ranges from 100% down to 0%,â€ she said, also announcing that use of ECF systems will be mandatory for all new managing agents in 2008.
The MRG is also rolling out a project to improve the speed of endorsements processing, a project piloted by Willis. The broker took the lead on a market-wide endorsements pilot using email, in a bid to cut down on the number of endorsements that have to be evidenced in writing and agreed face-to-face.
Projects completed by the MRG include the implementation of slip-creation guidelines, and the contract certainty initiative, which ensured greater clarity of contracts and speedy delivery to clients.
Its ultimate goal is for all risk submissions sent electronically, all claims processed and agreed electronically and all accounting and risk settlements to be done electronically.