Time for the insurance market to step into the future
The London Insurance Market is a trading environment rich in heritage. It is famous throughout the world for its ability to craft bespoke coverages to address highly complex risks. The subscription basis of the Market and the significant role played by the broking firms all add to the uniqueness of London as a centre of insurance excellence. But things need to change.
This is a complex Market. Its reluctance to lend itself to a wholesale move to electronic trading (as the LSE managed in 1986 under Big Bang) is perhaps not surprising. It is anticipated that the traditional face-to-face basis of placing risk will continue for the foreseeable future.
Given the cost, profitability and regulatory challenges of recent years, it is essential that the Market takes every opportunity to handle its processes in the most efficient way possible. Areas of the placing process which are relatively standard in nature, such as endorsements and closings, could easily be transferred to an electronic solution.
Electronic Placing is the exchange of placing documents and associated information between brokers and underwriters. It replaces face-to-face with digital messaging technology. In London Market terms, this could be a broker providing a submission and receiving a quotation from an underwriter, or getting an endorsement agreed. And all of it done electronically.
The key benefits of e-placing for the London Insurance Market are:
- Saving time for brokers and underwriters through a reduction in queuing time
- Reduced back office and processing time because e-placing can automatically log the data/documents into the systems
- The placing process will be quicker and cheaper, while fully auditable (crucial for compliance with contract certainty) thus improving client service level improvement and profitability
- Increased accuracy of resulting data, reducing errors and omissions
- Consistent resulting data in both parties’ back office systems - leading to faster closing
- Improved work practices, in particular mobile working
- This will free up brokers and underwriters to use their talent and expertise to maintain the London Market's competitive position
- It is important to remember that to maximise the potential advantages, electronic placing should enable connections between each party’s placing systems.
To date there has been a considerable amount of information and a number of varying opinions in the Market as to the nature, benefits and options inherent in e-trading. This, coupled with the speed of new information and products becoming available, makes e-placing an exciting topic for the London Insurance Market.