Lloyd's, the world's largest insurance market, is embarking
on two major IT projects to eliminate paper-based transactions and
help it compete against international rivals.
The projects - an electronic system for processing transactions and
a document repository to store new claims - will cost £11m to
implement and save £50m a year in costs, Lloyd's has estimated.
The new systems will eventually handle about £56bn in transactions
each year and be used by thousands of brokers and IT staff
worldwide. Member firms will have to update their main underwriting
and accounting systems to interface with the new accounting and
settlement system.
Although most financial exchanges have moved to electronic trading,
1.5 million paper documents pass through the London insurance
market each year. Lloyd's provides insurance services to businesses
in 190 countries.
"I have not found anyone who thinks that more than 50% of
transactions in the insurance underwriting market will still be
paper-based in five years time. We have to start driving paper out
of the marketplace," said Iain Saville, head of business process
reforms at Lloyd's and executive chairman of electronic trading
system supplier Kinnect, which is part-owned by Lloyd's.
The projects are part of a wider drive by the UK insurance market
to reduce costs and process claims more quickly by standardising
business around the latest technical standards.
The back-office accounting and settlement system will be built over
the next year to transfer and settle millions of messages sent
between brokers using the Acord XML-based insurance industry
messaging standard.
The system will be developed by Xchanging, a technology company
part-owned by Lloyd's. It will run on hardware from Sun
Microsystems with a Java-based J2EE engine linking to a large
mainframe.
An existing document repository for the insurance market will be
beefed-up over the next year to store the 90,000 new claims a year
handled by the market.