What Is Electronic Support for Placing?
Since its formation, the London insurance market has been
reliant on manual processes and hard-copy documentation for the
transaction of business between broker and underwriter. 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 implement
electronic processes to support the placement and amendment of insurance
business. This step is a key part of the LMG’s 2009 - 2011 vision for the future of the London market.
Put simply, electronic support for placing is the electronic exchange
of data and documents between trading partners to support the
transaction of insurance business, whether a new risk, a renewal or a
mid-term amendment. Electronic support for placing does not replace the
face-to-face negotiation of business which is a key strength of the
London insurance market and an important
aspect of the transaction of the large, complex and specialist risks for
which London is renowned. However, electronic
support for placing opens up opportunities to improve customer service
and increase the efficiency of the placing process by using face-to-face
negotiation more selectively - where it really adds value - and by
transferring data and documents electronically rather than solely in
paper form.
Within this context, LMG’s Placing Support Steering Group has
defined its 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.'
This 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.
back to top ^
The Benefits of
Electronic Support for Placing
Firms in the London market using electronic
processes to support placing are doing so because they can see how it
improves the service they deliver to their customers and how it results
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 support for 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 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.
back to top ^
Who Is Doing What
Information about which organisations are active in which areas of
business is essential to building interest and commitment in electronic
support for placing. The LMA produces a Landscape Analysis which presents details of
organisations currently engaged in placing support 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 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 implement electronic processes to support
the placement 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 organisations
facing similar challenges as the data standards, processes and
supporting custom and practice continue to evolve.
Driving the
use of Electronic Placing in London
The LMA is leading the development of
electronic support for placing under a project sponsored by the
LMG. The aim of this work is to:
- create clarity in the market about the benefits and implications of,
and options for, the adoption of electronic support for placing
- extend significantly the use of electronic support for placing
amongst organisations in the London insurance market.
2009 saw a number of key developments in electronic support for
placing: processes and protocols have been developed around use of
two-way messaging, the placement electronically of multi-section risks,
and the inclusion in messages of additional structured data. These work
streams have been promoted to the 2009.1 placing standard with a
February 2010 implementation date. Alongside this, Lloyd’s has
brought the Exchange to a state of technical readiness and levels of
participation by market firms continue to grow. The project has
continued its general promotion of electronic placing to the market
through project updates, production of supporting documentation and
tools such as the benefits model, and coverage in the press and at
market events.
The work on standards as well as the range of offerings now available
from suppliers and the progress made by the Lloyd’s Exchange has
shifted the focus from technical capability to business adoption. Work
in 2010 is aimed at driving adoption both from a corporate perspective
(why should my organisation do this) as well as a practitioner
perspective (why should I do this). Work will take advantage of
the class of business trading partnerships identified by organisations
participating in the Exchange, build on the market's eMRCE work and work
with specific sectors of the market (by class of business) to get
traction for project work and engage with practitioners. This will
be alongside the continuation of the project’s more macro,
market-level activities.
The primary work stream at the start of 2010 is to adopt the use of
ACORD messaging to support the transaction of endorsements. Full
details of this project and access to a range of supporting materials is
available at the link below.
| 
