Market told to adopt electronic systems or face compulsory measures
?Lloyd’s chief executive Richard Ward has sent out a clear warning to the London market to adopt business process reforms or face a raft of compulsory measures.
For the first time,Ward has set out specific proposals to increase the uptake of reforms, such as using the electronic claims file (ECF) and accounting and settlement (A&S) repository.
Ward insisted: “We’re not efficient; our customers are expecting more; and we are faced with more competition.
“There are no more excuses,” he added. “The [ECF] system works and is available to everyone. Businesses seem to agree with the principle of processing claims electronically but are having difficulty converting this into action.”
If progress is not made, Ward said that he would look at measures such as publishing league tables, which show relative performance; mandating the use of ECF; loading syndicates’ capital; lowering transactional costs for electronic transactions; and making use of ECF compulsory for newly-registered UK brokers.
He also promised that later this month Lloyd’s would set out timescales for ending the daily paper vans that transport documentation to Chatham, and using the A&S repository as the sole means of settling transactions.
Mark Barwick, project manager at the London Market Brokers’ Committee, welcomed the measures and said it was actively encouraging brokers to invest in ECF.
But he warned: “Any move to mandate ECF we welcome, although this must take into account that brokers have to build systems to support ECF, which takes time to implement.”
Although Ward’s stance has been given the thumbs up, the suggestion that London brokers should think about removing themselves from the “money game”, where brokers hold monies due to underwriters, in a bid to tackle the issue of trapped premiums was greeted with scepticism.
“It will open up a can of worms,” said one senior Lloyd’s broker. “[Clients] don’t want to collect 10% of claims from one underwriter and 10% from another and the same can be said for premiums. Brokers play a significant part in that process.”
According to Ward, there is an estimated $120m of trapped premium in the systems of the top 20 brokers, for the 10 year period between 1993-2003.