Following the success of its online broker service, Lloyd's is pressing ahead with an ambitious risk exchange network. Yvette Essen investigates

Where angels fear to tread, Lloyd's has come rushing in. Since 11 September, the insurance industry has been reviewing the amount it can afford to spend on technology. And some notable companies have made cuts. In its preliminary results for the year ending 31 December 2001, Jardine Lloyd Thompson explained: "In the field of online technology, much has changed in the market place over the past year which has influenced our investment strategy. Against a background of weaker demand we ceased the further development of JLT Interactive in America."

Despite the battlefield being littered with casualties, Lloyd's plans to launch an online system to improve the flow of data between insurers. But why is it so intent on dabbling with technology, when so many others are fighting shy?

On 1 May 2001, was launched as an online introductory service which matched intermediary's needs with Lloyd's brokers and underwriters. It now has 500 registered users from approximately 150 countries.

Delighted by the success of delivering its project on time and to budget, Lloyd's is now embarking on Project Blue Mountain (PBM). The new initiative allows data to be captured, stored and delivered electronically, aiming to save time and money by shortening business cycles, reducing errors and making more effective use of information. board member Caroline Wagstaff says: "This is something that other people have not done. Lloyd's is acting as a catalyst to get it up and running. But it will not be the ultimate owner."

Although PBM is partly funded by Lloyd's, it is hoped the interface mechanism will get financial support from third party providers.

A report on the venture says the new system is unlike other previous technology-based solutions because it is "neutral".

"Although it is being led by Lloyd's, it is expected that it will not control or manage it going forward," says the document.

"Its customers will come from all insurance markets internationally. It is focused on realising benefits through change management and not technology alone, it can seamlessly interface with every company's own internal business systems and it will provide solutions across every stage of the insurance buying process."

It lets commercial insurers exchange information. The system will focus on primary insurance and reinsurance, initially with aviation and professional indemnity risks. Claims will be followed at a later stage.

CGI and Hewlett-Packard have been selected as the providers of the hardware and software. Lloyd's, which originally discussed launching PBM in September, now hopes to have the first segments of the system ready by early next year.

The initiative has already gained the support of some major London Market IT companies. As it does not aim to become an exchange, where underwriters and brokers can place and commit to risks, Lloyd's is working with trading platform Inreon.

Inreon president and chief operating officer Kathrine Huelster says: "We are in discussion with Lloyd's on industry data technology standards."

Wildnet chief executive Mark Birrell says despite all the recent difficulties, the internet revolution is still the way forward. Benfield Grieg subsidiary Wildnet creates trading solutions for insurance and built Inreon's back office.

"Everything is done electronically so it cuts down on costs of paper. And speed should be an issue," says Birrell.

But he emphasised "strong research" is needed by any company to reveal what particular areas they can add value to as "it is very difficult to be everything to everyone from day one".

"It [a new project] has to be very targeted and must have a staggered approach," he says.

But one market participant warns that Lloyd's may be aiming too high. "The feeling in the market is sceptical as Lloyd's is being too ambitious," he says. "The question is has it learned lessons from past failures?"

In addition, PBM will face strong opposition from rival RI3K, which also aims to provide a single back-office solution to allow data to be exchanged between brokers, insurers and reinsurers.

RI3K chief executive Alex Letts is confident that since RI3K launched last September, it is way ahead of PBM. He says Lloyd's initiative will take two to three years to get off the ground.

"I am glad that someone else in the market shares our vision," he says.

"But the reality is that the vision is already built. We are dealing with reality not fantasy. It has taken us two years to build what we have so far with the very latest technology.

"There is a real danger here of an ITV Digital. BSkyB has already been built."