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LINE 32 We didn't start the fire!

Published on 11/12/2008 11:12:06

Roger Foord Associates

London and Global Insurance Systems Solutions, Marketing and PR

24 Lime Street, London EC3M 7HS

Mobile: 07710-479070

e-mail: info@rogerfoord.com

web: www.rogerfoord.com

 

10th December 2008

 

LINE 32 – We didn’t start the fire! Global business downturn but EC3 looks in good shape?

 

Thank you for reading my newsletter. This is issue 78 and previous issues of my newsletter and articles printed can be found on my website www.rogerfoord.com ‘Latest News and Opinion’.

In my business I am finding that the large UK IT consultants are turning to other markets other than their historic meal ticket of banking and investment. They appear to have read the press and deduced that the London market is hot for technology change and therefore they are playing the EC3 card.

Historically there has never been a good window of opportunity for ‘e’ change in London, as the market is either in the doldrums because of big claims or it has made money and fears the change to IT solutions. The momentum of change has been noticeable this past year but if the global market starts to shed business such as car manufacturing or Chinese exports are hit for the marine market, then it is quite likely that insurance brokers and underwriters will have less to insure and will have to concentrate on their bottom line and accept that it is their turn to face the inherited 2008 problems of other money markets, especially from their investments.

Technology might just miss its window of opportunity again for a couple of years, but maybe this time the momentum is unstoppable. 

From a business point of view respected commentators such as the Anthony Hilton of the London Evening Standard sees times as being an ‘Insurers’ ray of sunshine’. He points to the large volume of new money being raised by the Lloyd’s market and the hardening of markets because of the autumn hurricanes and AIG’s problems.

It still seems to me though, that with global businesses going to the wall and less spending money around, insurance is bound to have some form of blip in 2009, but in business terms the London market usually comes up smelling of roses. Which is good!

 

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In this issue:

* New members

* XIS miss out on hub, but have they?

*Bermuda – thank you and goodnight

* LIIBA launches and London brokers go it alone

* Boris boosts business for blighty (with the chairman of Lloyd’s)

* Annual market review and awards – charity breakfast 8th January 2009

* John Preston’s poetry corner

*  …. and finally, ***************************************************************************

Welcome to new members:

 

Melanie Wheeler and Claire Gaydon of Xchanging

Keith Jeffcoat of Vertex IT Solutions

Mitchell Wasserman of Oceanwide

Peter Mitchell of Spectrum

James Morgan

Irvin Shillingford

Rebecca Clark of Trader Media

Sarah Bourne of QBE

Stephen Breen and Mairi Mallon of Rein4ce

Vincent McGillvary of Petrotrin

Aarti Prassad

Dale Cockcroft of Axe Corporate Solutions

Chris Williams

Simon Godfrey

Karen Jenkins of Room Solutions

Steve Alcock of Real Solutions

Des McCavitt Aspen

Dennis Saunders of Hillman Saunders

Mike Jackson

Alexander Ferguson Incisivemedia

Beatrice Salubi

Jennie Jarvis of Hudson

Tom Braithwaite of Effective Image

Paul Clements of Coutts Bank

Roger Werrett of BIS

 

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Hubs – XIS bite the dust but are they out for the count?

Lloyd’s as a bourse has historically been off the pace when it comes to technology. The company market, albeit donkey’s years ago, led the way with the limited amount of technology being introduced, which was in fact only standard messaging (EDI) and electronic claims.

The arrival of new management at Lloyd’s charged with moving the market forward with the use of technology has brought forward Lloyd’s as the thought provider of new technology. Quite right so as Lloyd’s does now house much of the company market as well as the syndicate market.

In their enthusiasm to move the market forward Lloyd’s has introduced arm twisting in 2008 for claims electronic files and also broker premium payments, all with associated technology solutions. None of this has been too dramatic and most of it has been fairly simple to enforce as it makes such good sense.

You then get to the question of ‘e’ placing which is thought of by some as the panacea of all ills in London. The ‘What was the problem again?’ might be asked, but the technology corridor vision of Lloyd’s is irreversible and based on, if at first you can’t succeed then try, try and try again (i.e. Kinnect and G6).

With this as the only objective and no turning back from Lloyd’s the market has to accept the inevitable that one of these days, by ‘hook or by click’, a screen based market will happen. To support this Lloyd’s are looking for a partner to help in the ‘Kinnect by the back door’ process.

The recent furore over who should provide this service has brought up, as expected, a complete mish-mash solution which will give the London insurance market more problems than the McCartney’s divorce.

The incumbent technology provider in London, XIS, while having to fight its own battles in terms of its service, is the technology provider for all participants in the London market. It not only provides the central capture of all slip, endorsement and claims business in London but also the technology links for electronic connections. The electronic links are an historic situation since the advent of Limnet in 1986 and as far as anybody knows has never failed for a day (I think the system did go down one day in 1995, but nobody in London noticed!). The difference between its current service and a new ‘hub’ for Acord XML messages is very tenuous, to the point where it equates to changing ones bank from one to another. An action most sensible people avoid as the problems are just not big enough to go through the pain for a new unknown quantity.

The deal seems to have been done to exclude Xchanging in the final round of choosing a ‘hub’ partner but when one looks at Xchanging’s  user base, outside of their XIS service, they have the vast majority of brokers in London as well a fair chunk of underwriters, all  using their Rebus packages. Their user group therefore could offer in parallel, tomorrow, an alternative solution to the Lloyd’s initiative.

If XIS did take this route the loser in all of this is the London market where a cobweb of solutions would be available for underwriters and brokers.

Lloyd’s and the London insurance market regularly throws up the fear factor of the global market, where there is often no fear. The question which has been asked and yet is unanswered is why the market has to be pushed into situations by the central organisations. Nobody has surveyed the market and nobody has a democratic decision of all market users.  All that is happening is that the market representatives, the LMA and IUA, are pronouncing their support of something that hasn’t been clearly defined. London has much technology and works quite well when left to its own devices, but with a modicum of competitiveness. London’s brokers know what to do as do London underwriters. Whether Atos or IBM, the last two in the hub frame, get the deal the first action they should make is to link with XIS to ensure the London market’s IT future as a central body.

By the way, what was the problem again?  

 

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Bermuda – can the last insurer off the island restack the deckchairs please!

 

Over the past years I have found it sad but understandable that London insurance companies have made Bermuda, supposedly London’s biggest competition, their home base.

I am also slightly pleased to see that some of them are now quietly leaving the island and heading for new locations such as Dublin and the US.

Over the years many of the top management of these London companies have also had positions of influence in London’s market reform, which has seemed incongruous. The systems in Bermuda have also been put up as something that London has to be afraid of. This last statement has never been true and yet it has been used to  ‘put the frighteners’ on the London market for reform.Luckily London made itself better anyway. Jonathan Palmer-Brown the chairman of the new LIIBA, (see below) recently noted that Bermuda still pays its claims using a cheque.(So not much to worry about in London there then!)

The reason for being in Bermuda has also been the tax regime, but it appears that the newly elected president of the US does not take kindly to non domiciled companies taking advantage of the tax benefits of Bermuda which are not also given to US companies.  

I am sure those that left Lime St for sunnier climes will be welcomed back though.

 

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Broker associations diversify

 London market insurance brokers have voted to split away from the British Insurance Brokers Association and form a new body, the London and International Insurance Brokers Association (LIIBA).

The move will transfer the committee membership of the London Market Brokers Committee from its current home in BIBA to LIIBA, which will start operations on Jan. 1, 2009. LIIBA will be responsible for the activities run by the LMBC, but stressed that it will be completely separate from BIBA.(If you are confused don’t worry, they probably are as well!).

LIIBA sees the split allowing it to give a stronger focus on what London-based brokers find important, including the issue of London market reform.

“If there are issues revolving around finishing what we started in terms of reform," David Hough, the current executive director of the LMBC, told Best Week Europe. “What that means in particular is in terms of accounting and settlement and the development e-accounting, allowing brokers to send ACORD-standard forms to prevent re-keying information and in compliance with international processes. This should reduce the cost of the market, the error rate and cash should move more quickly”.

One issue which has not been mentioned is the fact that the new Lloyd’s act, when finally implemented, opens the Lloyd’s doors to non London brokers. Whether this means that some broker based in Africa, Asia or the US, will have to be approved by LIIBA is not mentioned, but it would seem sensible that Lloyd’s had thought through this type of security for the Lloyd’s business, something which has existed in EC3 for 300 years to protect  the London underwriter, the broker’s client and the financial payments systems in London via XIS.

Personally I think that this has not been thought through by Lloyd’s and it will cause a claims payment problem for clients.  

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Boris gathers the great and good for London

 

A new board is being set up in London to ‘sell’ the Square Mile.

Its reason for existence is to ‘warn that London’s status as a world leader in the financial world is under threat’. An idea being muted is that the City of London Corporation be split into two, one part for schools, housing etc. and the other for financial services.

Something called the Wigley review makes recommendations which will fight for London’s status against offshore tax havens, emerging financial centres and competitors such as New York.

I will keep a look out for how this progresses.

***************************************************************************Annual review and awards – charity breakfast 8th January 2009

Thank you to the 50 of you who have booked for my charity breakfast, with John Preston. It is taking place on January 8th 2009 at Balls Brothers Restaurant, Lime Street starting at 8.30.It will cost £15 which will include full English breakfast and a donation to a charity.

John and I will review the year in the London and global market in words, songs, poems and pictures.

 It will finish no later than 9.45.  

Contact me at roger@rogerfoord.com or 07710479070 if you would like to join us.

 

 

 

 John Preston corner – a charity book for Christmas?

The ‘History of Britain Rewritten’ is a colourful 263 page book packed with historical data rewritten into poetry (3,682 verses!). The book includes all main events and characters from 55BC to 1914.

All proceeds go to Little Havens Children’s Hospice. For more details see www.prestonspoetry.co.uk or contact John at john.preston@prestonspoetry.co.uk.

I have published a short relevant extract below.

Lloyd’s of London: 

Coffee houses were the rage in the 1650’s age.

People drank and aired their views on the latest piece of news

Business men would congregate. Lloyd, in 1688,

Opened one in Tower Street. Wealthy merchants came to meet

And discuss the risky trips of their large expensive ships

Sharing risks was logical. Insurance was inevitable.

Though the ships have long since gone, Lloyd’s of London carries on. 

 

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...................................and finally thank you reading my missives over the year and I hope 2009 turns out to be better than we are all led to believe.

I also hope that you might be able to make my review of the year on 8th January, details above.

 

Thank you for reading. Please pass onto friends or colleagues and ask them to register via my website www.rogerfoord.com .

Best wishes for Christmas,

Roger

www.rogerfoord.com

 

 

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