LMA and technology

Network technology

This is a year in which the London Market will make a concerted push in implementing further market reform and embracing technology, especially regarding the second phase of electronic claims handling being brought in. Richard Garnett, managing director at (re)insurance communications technology company Yellowblox, explains what will happen next.

Just before Christmas 2009, the Lloyd's Market Association (LMA) performed an interesting survey on market reform. As you might expect, the findings were the usual mixed bag of wanting change, though not too much and none of it imposed.

Only 7.7% of the respondents thought that the perception of the London Market process was excellent, while 43.6% thought it was good: poor and very poor accounted for 23%. When the brokers, underwriters, claims practitioners and service providers who took part were asked if technology will improve the quality of customer service within the London Market, and overwhelming 90% said yes; on whether change needed to be mandated, 55.5% said no.

On the question of managing agents being permitted to opt out of centralised premium processing, 60% said yes, 40% no. Comments on change being mandated - and when - included: "No. Let us do our own thing and prosper accordingly," "Yes… as soon as possible," "Wherever possible, change should be done by consensus, only as a last resort should change be mandated," and "Yes. To some degree, such as central hubs like brokers needing to conform. End recipients in the process don't need to; if they don't then that is their choice." There is little natural market consensus.

 

Necessarily better

There is no doubting that the London Market's use of technology has, over the last decade, improved by a very large margin, pushed by the need for contract certainty, the drive for cost cutting, improving customer care and a regulatory push from all sides.

In the past two years, market claims handling has seen a massive change, from paper file based face-to-face claims broking to the widespread adoption of electronic claims handling using Class and IMR. According to the Market Reform Group, this has resulted in a reduction in the time it takes for claims advice to be put through, though has increased the effort for carriers.

Probably the answer to the question of why we are not there yet is that change is slow to effect in this traditional market, one in which the legacy of the failed (and hugely expensive) Kinnect project is mingled with a fear of losing its essence and face-to-face contact.

Also, even traditional claims processing in the London market has posed logistical problems in the past, with complex distribution channels that encompass a tangled web of brokers, agents, lawyers, TPAs and underwriters.

While there have been huge improvements, the current systems - Class and IMR with electronic claims handling screens - are not helping carriers and brokers with workflow management, document file review, information management and some transaction types, (such as binder and proportional treaty claims, which are not properly supported by Class).

This is why, in a bid to reduce turnaround times, improve productivity and drive more effective claims handling, ECF2 is being brought in. Market testing of ECF2 is due to start in spring 2010 and, if everything goes to plan, the deployment dates for ECF2 will be between May and December 2010.

In a bid to help market participants understand the process, Xchanging started to give a series of talks in January about what was happening next with ECF 2. Xchanging said that the five-pronged solution to these problems would reduce the end-to-end cycle time for claims settlement.

Yet there are still some omissions in ECF2 such as inactive claims summaries, managing authority limits, online chase-ups, market checks and online company auto-limits.

This is where the market is left open for the myriad smaller firms that provide bespoke solutions to the entire gamut of companies in the market. For example, where there is a need to process a large binder with all parties sharing the same information that do not have the relevant access to the IMR, there are numerous customised solutions available in the market for companies and brokers, some of which can then process directly into the IMR for compliance and processing purposes.

 

Bespoke consideration

If they want to: have restricted views of the data you are collecting; brand a repository as its own (as your clients see it); filter data views based on field values; automate customised reports; or design feeds into and out of the system then a bespoke solution is worth considering. With easy integration available to both in-house systems and TPA's, it has relatively low switching costs while providing drastically higher customer service and turnaround times.

ECF2 may be making progress but there are many opportunities for companies to produce a bespoke solution that matches their exact needs and drastically enhances service levels for a relatively low investment of time or money.

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