Alex Letts says that when considering Kinnect, the subsequent benefits to the market should be acknowledged
It is easier to be a bit braver now that Richard Ward, Lloyd's chief executive, has mentioned the K-word. In his October speech to the Insurance Institute of London, he told the market to face up to Kinnect. His gist was that it happened, mistakes were made and we should acknowledge the experience if we are going to make progress towards a paperless market.
The market spent, we hear, at least £75m on Kinnect. But was Kinnect really such a waste of money as might appear at face value? Roll the clock on a year and re-analyse that shocking 75-0 scoreboard. The benefits of 11 months of allowing dust to settle have begun to paint a slightly different picture.
If you think about the good things that have happened in the watershed year of 2006, many of them have their origins in Kinnect. Now the great thing about beating your head against a brick wall is the relief when you stop, but it is nevertheless true that Kinnect has acted as the catalyst for much of the progress that the market has seen this year.
For a start, there is the change in leadership and management teams up at Lloyd's itself. The result is that now there is a simple, and clearly articulated, direction coming out of The Tin Towers. Hallelujah!
Then there is the G6, who may not have been everyone's cup of tea in the way they trampled their stilettos over the industry's virility, but it is obvious to most objective observers that they have injected purpose and urgency into reform. As a result, about half of the capacity in the Lloyd's market is now pretty much ready to participate in the paperless paradigm. That is half, up from zero, which was the score before Les Farceurs Kinnect crashed and burned.
The G6 had its genesis in the darkness that surrounded the Kinnect crisis as they decided to take matters into their own hands and create momentum.
While some brokers lost ground in the Kinnect days, Aon in particular was watching and learning from the horror show. The announcement in June that it would move to full electronic distribution was less than six months behind the closure of Kinnect. Such coincidences tend to be unusual.
More important than anything, there is now a realisation that one huge solution cannot work, and that the components have to be pursued discretely in separate streams by separate entities. That was not clear before Kinnect. Quite the opposite indeed.
Kinnect may have been a painful and expensive lesson, but it was a rite of passage. Without it, we would not know with such certainty the roadmap to a paperless market. Without it, we might still be back where the market was in 2001 even before the first snows of Blue Mountain's lofty ambition created chaos on Lime Street.
The reality is that without the pain of Kinnect, the future of the London Market might now look very bleak indeed.
Alex Letts is chief executive of electronic trading service RI3K
