Lloyd’s of London is questioning whether brokers' will change their claims processes and adopt an end-to-end electronic trading system, which the market needs to improve efficiency.
The London-based insurance market, which reported an increase in pre-tax profits to £3.84bn for full year 2007, outlaid its plans for the next 12 months to remove paper processes.
But Lloyd’s fell shy of its original target for brokers to file all claims electronically by the end of 2007. In the first quarter of 2008 some 10 percent of claims that could be filed electronically were still handled on paper, a strong improvement from the start of the three year programme, when 63% of claims were processed on paper.
Last September, Lloyd’s chief executive Richard Ward and chairman Peter Levene warned in a joint statement that they would take “tough action” to make sure insurers moved from paper based to electronic processing.
Yet placement of end-to-end insurance processes, involving the initial premium, renewals and any claims filing, in many cases continues to involve paper at one or more stages.
In its annual results, released Thursday, the market said it has made “significant progress” under its programme to remove antiquated paper-based systems in the market and process claims electronically. It was predominantly large brokers that moved to the electronic method, handling 97 percent of claims at Lloyd’s. The market said their changeover had led to a reduction in settlement times.
The 320-year old market, which is a society of corporate and individual members, said in its annual report that it remained committed to becoming “a more efficient and cost effective place to do business”.
For the processing of new insurance premiums, known as accounting and settlement, the changeover from paper has been much more dramatic. The paper delivery system at insurance payment processing supplier Xchanging was closed this month, which led to a sea change in processing ability.
In 2007, 35 percent of premium transactions were processed on paper by Xchanging. But this week, Lloyd’s said that the “vast majority” of premiums were processed electronically in the first quarter of 2008, well ahead of the planned closure of the paper system.
Lloyd’s supported the closure of the service, maintaining that electronic accounting and settlement would lead to faster premium filing, more accurate submissions, lower operating costs and lower operational risk.
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