Lloyd's to pilot electronic insurance exchange in bid to modernise
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LONDON • Lloyd's of London will pilot an electronic exchange to handle simple insurance risks this year as the 330-year-old commercial insurance market seeks to modernise. Lloyd's, which started life in Edward Lloyd's coffee house in 1686, is trying to become more efficient and cut costs as it competes with rival insurance centres such as Bermuda and Singapore.
As part of its modernisation plans, Lloyd's said last year that it would launch two electronic exchanges, one for simple and one for more complex insurance risks.
It said on Wednesday it had taken a 40 per cent stake in an existing electronic placement system, PPL, which will form the basis of the complex risk exchange.
"We are now ready to start building the future at Lloyd's, having achieved three major objectives - securing finance, setting the governance structure and detailing the plan for the next 12 months and beyond," chief executive John Neal said in a statement.
The Lloyd's market is made up of 99 syndicate members and insures anything from ships to sculptures.
Much of its business is carried out face-to-face in its City of London tower, with brokers and underwriters carrying papers around the building in briefcases and even suitcases.
Several insurance sources told Reuters they approved of the modernisation plans, though one said the exchange was trying to do too much too soon. Some smaller insurers and brokers are wary of being cut out of the new-look market.
Mr Simon Matson, chief executive of Gallagher's UK broking and underwriting business, said: "We cannot overlook the importance of human discussion and specialist expert counsel which is vital for the complex risks underwritten at Lloyd's."
Mr Christopher Croft, CEO of Lloyd's London & International Insurance Brokers' Association, said Lloyd's needed to improve its complex settlement processes.
"Brokers are still asked to do too much on behalf of insurers... very little of which is visible," he said in a statement.
REUTERS
