Kinnect, an electronic front-office system for exchanging insurance risk and contract details, will help Lloyd's prove to the Financial Services Authority that it is taking risk assessment seriously, according to Iain Saville, head of business process reform at Lloyd's.
He said Kinnect would also reduce the number of errors made during negotiations for insurance policies and keep an electronic record of discussions between brokers and underwriters to reduce the likelihood of disputes.
Kinnect is based on Java 2 Enterprise Edition technology and internet data standards Soap and XML. Most Kinnect messages have been accredited by Acord, the international electronic messaging standards agency for the insurance industry.
However, Kinnect, which is part-owned by Lloyd's and has cost £53m to develop so far, is not designed to replace all face-to-face meetings between brokers and insurers. The aim is for 70% of insurance contracts to be processed and recorded over the system by 2007.
"The FSA has said that by the end of this year it wants to see an end to the 'deal now, detail later' culture in the insurance industry," said Saville, who previously led the project to develop Crest, the electronic settlement system for shares.
"It wants to make sure that firms have a record of all the agreed details of the different types of risk they deal with. Kinnect can help them meet these demands."
Kinnect is already being used by two brokers and 10 managing agents. A spokesman for the FSA said it was in discussion with Lloyd's about Kinnect. "We are very keen to improve contract uncertainty and technology is likely to play a role in this," he said.