Electronic Placing in the London Market
The LMA provides the lead in developing and promoting the use of
electronic processes to support the placement of insurance business in
the London Market.
The information and resources offered by this project, sponsored by
the London Market Group (LMG), are available to Lloyd's
Managing Agents, London Brokers, London insurance companies and other
interested organisations to support their own evaluation of the
opportunities arising from electronic placing and to begin their
involvement in the future of risk placement in the
London market.
** For an Introduction to Electronic Placing,
download this guide **
Contents:
What Is Electronic Placing
Since its formation, the London insurance market has been reliant on
manual processes and hardcopy documentation. The associated
inefficiency; the high cost of handling paper, the lack of control, the
lack of immediate availability of records and the delays in serial
distribution of paper - with the associated negative impact on customer
service and competitiveness - have led market organisations to seek
methods to improve this situation by supporting the placement of
business with electronic processes. This requirement has been
recognised in the 2009 - 2011 vision of the London Market
Group (LMG).
Within this context, the Electronic Placing Steering Group has
further defined the vision as:
'The use of electronic processes, compliant with ACORD
international data standards, for the submission of risk details, the
agreement of terms, and contract formation for all risk placements and
contract amendments in the London market, enabling the selective use of
negotiation outside the electronic process where required by trading
partners.'
The vision sets out a goal; the use of electronic processes to
support all aspects of the placement of business, alongside face-to-face
or other negotiation where this is seen as desirable, for all business
transacted in the market. More detail on this and an accompanying
roadmap is available here.
Put simply, electronic placing is the electronic exchange of data and
documents between trading parties to support the transaction of
insurance business, whether a new risk, a renewal or a mid-term
amendment. Electronic placing does not replace the face-to-face
negotiation of business which is a key strength of the London insurance
market and an important part of the transaction of large, complex and
specialist risks for which London is renowned. However, electronic
placing opens up opportunities to improve customer service and increase
the efficiency of the placing process by using face-to-face more
selectively - where it really adds value - and by transferring data and
documents electronically rather than solely in paper form.
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The Benefits of
Electronic Placing
Firms in the London market are already
actively using electronic placing. They are doing so because they can
see how it can improve the service they deliver to their customers and
how it can result in increased return on capital. These benefits arise
in four key areas:
-
strategic business opportunities
-
costs savings and increased operational
efficiency
-
improved market transparency
-
improved compliance and business
management.
Further discussion of the benefits of
electronic placing is contained in the Benefits Model produced by the
LMA. The Explanatory Notes describe the range of
benefits and the operation of the model itself. The Model is an interactive spreadsheet into which
organisations can enter some basic organisational information and draw
off a benefits report. For each potential benefit reported, the
model will indicate its likelihood of being achieved by the
organisation, when it will be delivered, which stakeholder group will
benefit, what the barriers to achieving the benefit are and what
organisational changes are needed in order to deliver the benefit.
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Who Is
Doing What
Information about which organisations are
active electronically in which areas of business is essential to
building interest and commitment in electronic placing. The LMA produces
a Landscape Analysis which presents details of
organisations currently engaged in electronic placing and the scope of
their involvement. This document will be reissued on a regular
basis to track the developing landscape.
The positioning of suppliers and their various offerings as they relate
to electronic placing is also fundamentally important information.
This information is also available in the spreadsheet.
Getting
Started
The LMA's Getting Started guide sets out the basic steps an
organisation should take to become involved in the electronic placing of
business. The LMA offers support to all organisations in the
London market throughout this process and provides an opportunity for
organisations to meet with other users of electronic placing as the data
standards, processes and supporting custom and practice continue to
evolve. Details of the LMA's work in this area is described
below.
Driving
the use of Electronic Placing in London
The LMA is leading the development and promotion of the use of
electronic placing in London, under a project sponsored by the London
Market Group.
This project responds to LMG's vision with the objectives of:
-
creating clarity in the market about the benefits and implications
of, and options for, the adoption of electronic placing
-
extending significantly the use of electronic placing amongst
organisations in the London insurance market.
A roadmap sets out the activities currently
underway for 2009 to take us towards the achievement of the
electronic placing vision. It also gives organisations a clear picture
of when and how they can participate in what is happening and, along
with the Landscape Analysis, shows the status of potential
electronic partners.
At the start of 2009 the project was reviewed. This resulted in
the Electronic Placing Steering Group agreeing to a change to the scope
of the project and to them identifying four critical success factors for
2009. These are:
- All functional specifications are finalised
- Broker interest has been converted into broker action with at least
ten brokers achieving ‘live’ status
- A single implementation standard and a roadmap for migration to
subsequent standards has been agreed; this single standard to be
implemented by the start of Q4 2009
- The cultural resistance amongst practitioners has been removed.
A full copy of this review is available here.
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