October 1 - 3, 2000, The Westin Providence, Providence, R.I.

The View from London Nigel Barton, underwriting director, DP Mann

London Market Seeks Common Technology Bonds
By Brendan Noonan, Brendan.Noonan@ambest.com

The London insurance market is continuing a sometimes uncomfortable, but necessary transformation as the roles of key players are scrutinized in an effort to make Lloyd's and non-Lloyd's insurers and brokers work together more efficiently, said one architect of the market's overhaul.

The end result, if enough participants in the London market can adopt more common practices, procedures and technology, will be "no more London fog" for international clients seeking to do business there, said Nigel Barton, underwriter director at DP Mann Ltd., a Lloyd's managing agency. Barton also is head of the protocols and standards group of the Lloyd's/IUA forum, which is the joint effort of Lloyd's and the International Underwriting Association to streamline the back-office operations of the market.

Technology is a major ingredient in the effort to make London a friendlier place for global customers to do business, but the joint forum is working against the backdrop of a long history of failed efforts to develop a unified electronic architecture. "Politics and technology seem to continually throw up their obstacles," Barton said. But in this instance, he said, "at the highest level, the political drive to get these things done is significant"--perhaps greater than ever before.

In the weeks ahead, the forum's efforts will show visible results in the form of an operating manual--dubbed the "purple book"--for the processes of placing business. This will include a best-practices checklist, the use of a single lead underwriter on policies, the use of a single policy document on each risk and accountability measures that specify who must do what and when.

Also under scrutiny are the Lloyd's Policy Signing Office and the London Procession Center, which respectively handle many back-office functions for Lloyd's syndicates and IUA companies, including managing the flow of cash through the markets. There has been a move toward merging the two into a single commercial enterprise. The joint forum has been working on accounting and settlement practices, and Barton said there soon would be an announcement involving an "innovative financial structure with a technological partner."

The movement of functions such as premium processing and claims payment into a shared infrastructure will take many tasks out of the hands of brokers, who have long held a pre-eminent position in every aspect of the relationship between insurers and customers. "This is a highly emotional topic for some brokers," Barton said, but they are taking a serious look at playing redefined roles in the market.

Among IUA companies, too, it's important to gain critical mass, and "gaining buy-in from some of the IUA companies can be a challenge"--especially when they answer to overseas parents, Barton said.

But in addition to the political backing from on high, Barton said there is sufficient fear that London will lose its pre-eminence to attract wide support in the market. The alternative is to continue with the existing level of service, of which Barton said, "at its worst it has sometimes been shameful."

Individual players--including DP Mann--also have mounted their own efforts to be more efficient. DP Mann has instituted the use of delegated authority for managing general agents to remotely perform functions such as claims review and special acceptances of certain risks. While some brokers have been skeptical, the system has brought in business that might have gone elsewhere and allowed the brokers to "concentrate on deal-making, not processing," Barton said.

Also to come is the development of the Lloyd's portal, which Barton said has enormous potential as an Internet gateway to the London market.

Barton spoke Monday at "E-Fusion: Where Insurance and Technology Converge," a conference sponsored by A.M. Best Co. held Oct. 1-3 in Providence, R.I. Full coverage of the event is available online at http://www.ambest.com/e-fusion.html..