Electronic Trading/Processing Surges at Lloyd’s

“A quarter of all premium transactions in the London market are expected to be handled electronically by the end of the month,” said a recent bulletin on the Lloyd’s web site (www.llloyds.com).

The Accounting and Settlement Repository Board – the cross market body which oversees the technology for electronic processing of premiums – has released figures, which “reveal that the number of daily transactions has almost doubled since the start of the year.”

The number of premium-related transactions going through the system has gone up from 400 a day at the end of 2006 to more than 700 a day. The total number made since the repository went live last September is around 34,000.

Lloyd’s ultimate goal is to see the traditional slipcases – the folders stuffed with papers that brokers and underwriters use to evaluate risks – disappear entirely. Although its overly ambitious, but fundamentally flawed Kinnect project, failed to achieve this goal, private access providers, led by ri3k and the brokers’ own business to business processing systems, have stepped in. “I think that goal [fully integrated electronic trading] is possible within three years,” said ri3k CEO Alex Letts. A number of London market professionals would agree with him.

The Market Reform Group, which is spearheading the coordination of electronic processing, launched the Insurers’ Market Repository (IMR) – an electronic filing cabinet that enables claims and premiums to be processed electronically last September. It noted that the “section of the repository used to transact premiums has recently undergone an upgrade which will enable even greater volumes to go through the system.

Pat Talbot, Chair of the Accounting and Settlement Repository Board, commented: “These figures clearly prove that the London market wants to work electronically. It enables each firm to operate more efficiently, and for brokers and underwriters to focus on their key job covering the world’s risks instead of wasting time re-keying data and shuffling paper around the marketplace.

“Sixteen brokers are now using the repository to process premiums, and we are in talks with a number of others who will be signing up shortly. The benefits of the system speak for themselves, and the fact that some 34,000 transactions have been made in less than four months gives a clear indication of its popularity.”

“This is an important step towards reforming London’s processes. It brings the market closer to an electronic processing environment as set out in the Market Reform Group’s vision for reform,” he added. “A faster and more efficient process increases our competitiveness and brings us much more in line with other financial service industries. It is good news for firms and their customers.”

Trevor Maddison, Senior Vice President at Marsh, noted: “This is positive proof that market reform is working. Anything that removes paper processes and boosts efficiency is a good step forward, and these volumes clearly show that the market is adapting. It is early days, but we are clearly on the right track.”