Electronic Placing in the London Market

adding value to the broker underwriter relationship

Rob Gillies, LMAMarket Reform Forum 2007

• What is electronic placing and what’s in scope?

• Who’s doing what

• Experiences and lessons so far

• A look forward

“They always say that time

changes things, but you actually

have to change them yourself”

Andy Warhol

1700 2000“They always say that time

changes things, but you actually

have to change them yourself”

Andy Warhol

2010?

Improved efficiencyReduced costs

Exploit strategic business opportunities

Why change?

Global and market change

Customer service demands

Need for increased return

on capital

Agents for Change

• The global marketplace

• Convergence of insurance and capital markets

• Growth of self-insurance

• High transaction costs

• Market process inefficiencies

• Restrictive practices

(Dennis Mahoney – Acord Forum London, 2007)

What is electronic placing?

Face to Face

Complex

Face to Face, Telephone, Electronic

Moderate

Electronic

Simple

Negotiation

Data Exchange

Strategic Opportunities

Increased Regulatory Compliance and Increased Market Transparency

Reduced CostsIncreased Operational Efficiency

Electronic exchange of data and documents

Selective use of face-to-face negotiationenables

Benefit delivery Benefit delivery

Improved customer service + Increased return on capital

Benefit delivery

Improved management information

Earlier sight of data and documents

Improved access to marketsMore productive use of time

Electronic exchange of data and documents

Selective use of face-to-face negotiationenables

Brokers (examples) Insurers (examples)Benefit delivery

Improving the broker-insurer relationship

Resource: Electronic Placing Benefits Model

Increased quality negotiating time

Opportunity to grow businessIncreased attention to the

customer

Who’s doing what?Lloyd’s Brokers• 4 trading live• 2 investigating and developing

Insurance Companies• 1 trading live• 8 investigating and developing

Managing Agents• 7 trading live• 18 investigating and developing

130 ‘markets’ trading with Aon via Ri3K

Much increased general level of interest over 2007

Resource: Electronic Placing Landscape Analysis

Experiences and lessons so far

Technological Barriers• Upgrading internal core systems• Conflict with other projects• Conflict with other reform activity• Integration with front and back office systems• Development of functionality by suppliers

Process Barriers• Failure to deliver minimum levels of value required by

organisations to participate• Version control between paper and electronic slips

and other documents• Duplicate processes – EP and non-EP• Slip signature and evidence of cover• Predominance of Outlook as user interface and

‘workflow’ tool• Differences between London and international

processes

Commercial Barriers• Absence of market critical mass• Absence of key trading partners• Absence of leadership (CEO) support and

endorsement in firms• Failure to recognise the benefits• Reluctance to accept the benefits as a convincing

business case• Failure of firms to simplify the benefits message and

relate to the firm

Behavioural Barriers• Fear of the impact on jobs, work routines, lifestyle,

etc• Workload• Market reform and change burnout• ECF and A&S seen as a priority (politically easy

‘back-office’ functions)

Other Barriers• Absence of market critical mass (1)• Absence of key trading partners (2)• Benefits not yet fully recognised (3)• Lack of leadership (CEO) support and endorsement in

firms (5)• Reluctance to accept the benefits as a convincing

business case• Failure of firms to simplify the benefits message and

relate to the firm

Behavioural Barriers• Fear of the impact on jobs, work routines, lifestyle,

etc (4)• Workload• Market reform and change burnout• ECF and A&S seen as a priority (politically easy

‘back-office’ functions)

Top Five Barriers to Adoption

Look forwardDevelopment• Enhancement of the data message• Value of the data• Compatibility with accounting and settlement

processesMarket Engagement• Brokers• Carriers• Suppliers

Vision, Objectives and Roadmap• Developing a common picture of the end game• Knowing whether we’re getting there; metrics• Target driven adoption?

2010?

Electronic Placing

Accounting and Settlement

Electronic Lifecycle of the Risk

Claims adjustment and settlement

Evidence of Cover

Risk Renewal

Contract Amendments

John HobbsDirector of Market ServicesInternational Underwriting Association020 7617 4445john.hobbs@iua.co.ukwww.iua.co.uk

Rob GilliesHead of Market Reform PolicyLloyd’s Market Association020 7327 8377robert.gillies@lmalloyds.comwww.the-lma.com

Resources: www.the-lma.com