London Insurance Market (LIM)

The LIM Organization Structure International Center for Insurance services Attracts about over £4b in the form of invisible

export earnings annually. Comprises of hundreds of independently owned and

managed brokerage and underwriting (or insurance) businesses and market leaders.

No central authority governing the market but each participant is affiliated to a respective broker or underwriter trading association.

Culture of the market is based on personal relationships and trust.

Very innovative and Risk placement business Process in LIM

London Insurance Market (LIM)

Objective of LIM systems Development of market based inter-organizational

systems

To streamline business processes and save market costs while improving quality

To safeguard its reputation as the key international insurance market globally

Cost saving of about 300m pounds



Challenges facing LIM Weather they would be able to achieve critical mass for the

adoption of the key and hotly contested electronic placing support systems (EPS)

Lim was experiencing a number of years of consecutively high losses of over 2 billion pounds in early 1990s about 15 billion pounds in late 1990s / early 2000.

A number of potential competitors were threatening the LIM industry position

The need for effective change management in implementing inter-organization systems Underwriters, Brokers,


Trends International Insurance Increased globalisation

Client Areas of new opportunity globally

The development of new communications and information technologies

Continued growth of alternative underwriting markets


Technology development at LIM London Insurance Market network (LIMNET)

http://www.ecommerce-awards.com/awards2000/winners/Case%20Studies/Limnet%20Ltd%2093.html

EDI systems Computer Data Exchange (C-DEX)

Developed by a US-broker subsidiary in London to significantly lower the cost of risk placement.

Strategic importance “To prevent the central Lloyd’s body to have a central

database of information… therein lies the power… “ The brokerage firm knows who declines what risk and why. Whoever holds the customer data holds the “whip’s handle”

It is not for the whole market Cultural differences between US and Europe?


LIMNET EPS Strategic Relevance

1. That London was at the forefront of technological developments

2. Reinforcing its status as an important insurance market globally.

3. In addition, EPS would support the placing of business between underwriters and brokers

4. Considered to be the heart of the work of this insurance market,

5. reducing costs and improving service quality. 6. Implementation was considered pivotal in the radical

transformation of the Market as all other business processes flowed from this front-end process

London Insurance Market (LIM)Risk Placing Process

Note: After negotiation with lead Underwriter, Broker request participation from fellow Underwriters who typically accept agreed terms and conditions.

Broker Presents Risk Package to Underwriter

Lead Underwriter Assesses Risk Package

Broker Receives Request and supplies Requested information

Lead Underwriter may Request Supporting Information

Negotiation /Closure

Package

Request

Information

Broker Creates Risk package

with input from client


LIMNET EPS Benefits +

Supports existing process? Improved efficiency through a reduction in data

entry costs and improved accuracy of data Speed up the placing process Effective in distributing risks and physical visit

would no longer be necessary Initial capture of risk information in EPS would

efficiently feed into other London Market systems to support back end processes such as claims systems and accounting without the need for data re-entry


LIMNET EPS Challenges

Brokers and underwriters approach to IT Stakeholders multiple interpretations

Ability to monitor brokers efficiency Expected to provide a shift in power and

control of the business from underwriters and brokers to senior management

Loss of personal relationships and trust Loss of collected significant market intelligence

London Insurance Market (LIM) Global Influence

“Placement will become a highly specialized function conducted at a small number of sites globally … we are building a global placement system linking all our international offices into the market through global broking centers or 'dealing rooms' that control the traffic ( US-Broker Publication)”

“The market for industrial/commercial risks is globalising. It is just as likely that the placement for one of our major N. American clients will be made in Bermuda, Switzerland or France as in London or New York…it is therefore essential that our business transformation efforts be applied on a global scale and that we develop methods and technologies that can efficiently operate anywhere.” (Vice Chairman US Broker April 1994)”

“They are 'bloody minded, different and aggressive... We are doing it in a market way, a unified way.... Their system shows UDI (Unilateral Declaration of Independence)...They are on their own.... I am convinced they are hoping that the EPS system would fail so that their system will become the standard. (London-Broker Director 1994)”

US Broker’s strategy is a competing one to the London Market with significant differences in value judgments since they are using technology for differentiation…I think US Broker has vested interests to see the JMI (EPS) fail. (LIMNET Director Oct 94)


Recommendations in 1995 Going forward what would you do? Impact of Lloyd’s CEO exit Establishing industry standard and inter-

organization systems Change technological environment Global positioning. Alliance? With who and why?

London Insurance Market (LIM)

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