Warning of complexities surrounding pioneering commercial e-trading plan
Towergate’s acquisition of Open International will revolutionise the electronic trading of commercial lines products and act as a springboard to wider use, the chief executives of the two organisations claimed this week.
In an exclusive interview with Insurance Times, Towergate chief executive Andy Homer and Phillip Bell, chief executive of Open International, outlined their plans following the £276m deal.
This will see Towergate and Open International begin a major drive to introduce a string of electronically-traded commercial products to Countrywide Network brokers and later to Open GI brokers.
But industry observers warned of the complex challenges ahead in achieving this goal.
Bell said: “The deal creates critical mass for electronic trading of commercial lines. Insurers will find it viable to trade electronically. It will sit in parallel with Imarket.”
Bell said there was £17bn in commercial lines gross written premium that was not electronically traded. “Insurers have been tentative when it comes to electronic trading of commercial lines.
“There will be a transformation of commercial lines e-trading as a consequence of the deal.”
The system, known as Open Trader, is being piloted and will be rolled out over the next six months.
The first wave of products will include travel, motor trade, personal accident, tradesman’s liability, general liability, property, marine, shops and offices.
Towergate expects its e-traded products to be in the vanguard, with other insurers to follow. Homer said: “It will not just be Towergate products on the system. We aim to be first to get commercial advantage.”
Next year it is expected that 60%–70% of Towergate’s commercial lines transactions will be electronic.
The first stage of Open Trader’s roll out will begin with Countrywide’s 700 broker members. Bell said: “We have a closer relationship with these brokers. These are right in the sweet spot of several products that will be available from Towergate and others.”
The second stage will be to roll out the platform to Open GI’s broker community. “It will be driven by supply and demand; brokers will take it up as they see fit,” said Bell.
There were warning, however, of the challenges ahead. John Kitson, intermediary business director at Norwich Union said: “We always look for new ways to trade. Commercial EDI has not taken off to date. We will be interested to see where it goes. But the complexity of achieving this must not be under-estimated.”