The latest attempt at dragging the London Market into the age of digitisation has been launched thanks to a joint venture between some of the market’s most influential trade bodies.
While expectations for this venture are high and initial support strong, several previous attempts at launching electronic platforms have failed and its backers are keen to extol the advantages of the market switching to a single system from the start.
An electronic platform digitising the placing process would make the London Market more efficient and save costs while freeing time for brokers and underwriters to focus on more complex and innovative areas of business, David Ledger, chairman of Placing Platform Limited board, told Intelligent Insurer.
Placing Platform Limited (PPL) has been formed jointly by the International Underwriting Association of London (IUA), the Lloyd’s Market Association and the London & International Insurance Brokers' Association (LIIBA). It started trading on July 11.
“It is a significant step in the history of the London Market, which has historically always been paper based, as PPL enables brokers and carriers to quote, negotiate and bind business electronically,” Ledger said.
The platform allows brokers and underwriters to exchange information on terrorism risks first but the service will be expanded to other classes within two years, Ledger explained. The next lines of business to go on to the platform by the end of 2016 will be professional indemnity, followed by directors’ and officers’ liability insurance and then financial institutions cover.
Nine brokers and 42 underwriters are participating in the launch and these numbers will be expanded as the product range is extended, Ledger explained.
The system will allow improved access to the market and speed of placement to the client, according to the London Market Group. Brokers and insurers can message between the platform and their own systems and the platform creates an audit trail of actions undertaken on or via the platform such as holding the detail of the different versions of the placement record.
Advantages of the new system include avoidance of considerable costs incurred by carriers integrating with multiple placing systems rather than a single market utility, according to the IUA.
The PPL board has estimated that carriers could avoid over £61 million in such set up costs and £12 million annually by supporting one system instead of the four or more which could evolve. Economies of scale and the potential to reduce re-keying could contribute further financial advantages.
Ledger said: “Exact cost reductions will vary depending on each businesses use and integration with their systems, however process improvements include reducing multiple data input by multiple people, so saving time and reducing the risk of errors.”
The system links to brokers’ and carriers’ own IT system, and also provides a full contract audit trail, offering the ability to compare documents and quickly identify changes and improve security of data.
PPL may make London the first and only commercial insurance market globally to implement electronic placing, according to the IUA. It will be able to provide real time status updates to clients on the progress of quotes 24 hours a day. Clean, standard, structured contracts will replace scanned versions with manual stamps. Signed line confirmations to carriers could be accelerated by up to 30 days. It is expected to lower placement costs and make the market more accessible to international clients.
“It will rid the market of duplication and time-consuming administrative tasks, and will provide accurate information to assist underwriters and brokers to place risks. It is anticipated that in future simple placements and endorsements will be done electronically, freeing up time for brokers and underwriters to focus on more complex and innovative areas of business where they can add real value,” Ledger said.
Previous attempts to digitise the market such as Kinnect and Inreon failed. This was, however, mainly because these projects were done in isolation, without the collective support of the market, Ledger said. The different approach chosen with PPL gives reasons to believe that this time it can succeed.
“PPL has been designed by the market for the market, and it is funded and supported by brokers and carriers alike. It is a cross market initiative and therefore there is tremendous support from all communities to make it work – something that has been missing in earlier attempts,” Ledger said.