Lloyd’s has recently announced the new Lloyd’s Exchange initiative which is being established to provide two key aims: remove the future need to maintain multiple connections with other parties and suppliers in the market, and to ensure that one standard is enforced.
All of the ambitions of the Exchange are absolutely laudable and important for the future success of the market. However, despite what anyone says, this is Kinnect all over again and this project will go the same way unless the most vital issue is addressed.
Kinnect had poor technology, poor management, and confused ambitions but it was primarily in place to provide a central mechanism to deliver data from brokers to underwriters during the placing process.
Kinnect was meant to take messages from Broker systems as submissions were created and distribute them to underwriters. Unfortunately, and this is where history is repeating itself, the brokers do not have systems that capture data at that point in the process.
Once Kinnect realized that, they set about building a Broker front-end using market practitioners to design a mechanism for capturing data and creating placing documents (Slips). Asking multiple brokers to agree on a design proved “challenging” and the lengthy development cycles ensured that what was coded rarely matched with what was asked for.
The system required users to capture information in data screens that had to be re-programmed when changes were needed. The Slips rendered from this data were invariably disappointing and took far too long to generate to be practical.
The method of using data to create documents is flawed and unless that approach is reversed, Lloyd’s Exchange will flounder and fail just as its predecessor did.
If the other financial markets can change to a pure technology trading environment, why can’t Lloyd’s and the London Company Market? There are a number of reasons why this has not proven as easy for the Insurance and Reinsurance community but I believe the fundamental issue is that Risks are not just about numbers and data, they contain words and paragraphs and clauses that, in the event of dispute, go to court to be dissected by Lawyers.
The first priority should be to generate quality, accurate documents needed during the negotiation process and for prompt delivery to clients.
Data should be a by-product of the document creation process.