L&G develops online trading standard

Legal and General (L&G) has launched the first online trading standard for the insurance industry.

Legal and General (L&G) has launched the first online trading standard for the insurance industry.

Nick Huber

The XML-based trading standard allows independent financial advisers (IFAs) to apply for and receive confirmation of with-profit bonds online through a portal.

L&G, which is developing other financial products to sell through the trading standard, believes IFAs and insurers will adopt the standard in the race to cut costs.

But the use of portals by IFAs has been limited until now and remains a key obstacle to common Internet trading standards, according to a report.

Developed with Internet portal the eXchange and life and pensions standards body Origo, the trading standard is the first time IFAs can sell a financial service product over the Internet without depending on paper forms.

Sandy Neilson, managing director of Origo, said, "We are going to be first in the market with what you can call an e-product. We are now moving away from getting static data electronically."

IFAs can log on to the portal from L&G's Web site and complete an online application form, created by Product Application Component software tools from software supplier Focus.

The forms are sent to L&G's back office via an XML data-standard before receiving confirmation from the insurer.

However, the system cannot yet handle payments online and financial service regulations require a paper "declaration" signature from the customer. L&G also refused to give a target for the number of IFAs that will be using the service.

Although L&G will still do business with IFAs through an extranet site, it intends to carry out most through portals in the future.

But research released earlier this month from consultancy Cap Gemini Ernst & Young shows that IFAs have been slow to embrace Internet technology. Of 40 IFAs questioned, only a handful expect to offer a Web-based link with their clients by 2004.

And while the main life assurance providers are backing portals, such as the eXchange and Assureweb, they are sceptical over cost savings that portals claim they can deliver.

Read more on Business applications