Ward prepared to mandate action on electronic claims
Lloyd’s CEO Richard Ward has told the market he wants to see all claims transacted electronically by the end of next year.
Ward, who was speaking at the Insurance Institute of London’s lecture today (26 October) in the Old Library at Lloyd’s, said: “An Electronic Claims Repository has been established and was making good progress but has stalled. If we need to we will mandate action to take it forward again as we want to see all claims being handled electronically by the end of 2007.”
The Electronic Claims Repository was launched in September and five brokers and nine managing agents are already committed to processing all claims electronically by the end of the year. However, the project has recently been delayed by legal wrangling over the level of disclosure available to brokers in the repository.
Ward said that his first priority and immediate focus was to deliver efficient business processes such as placement, claims and accounting and settlement that will enable growth. He said the focus was also crucial to the market meeting the Financial Services Authority’s contract certainty target of 85 percent of contracts by the end of the year.
“We have made progress in a number of areas but there is still some way to go. More than 80 percent of contracts are already achieving certainty and we are well on track to meet the end of year target of 85 percent,” said Ward. “We have produced guidance to help the market to achieve this but it is up to brokers and underwriters to take responsibility.”
The Lloyd’s CEO said that achieving contract certainty was key to replacing the “deal now, detail later” culture and repairing the reputation of the insurance industry which had been brought to an “all-time low” by Spitzer’s investigations.
“Spitzer’s investigations sparked unprecedented scrutiny of the commercial insurance market and served as a wake-up call to the sector. His investigations highlighted the lack of transparency in the industry’s workings and showed just how far our industry’s practices lagged behind what a 21st-century business environment expects.
With the industry reputation at an all-time low, there has never been a greater need to improve the level of service to our customers and the clarity of our business processes,” he said.
Ward praised the work of the Franchise Performance Directorate which was “making a real difference”.
Ward said: “There was no greater test than last year – a record hurricane season. Hurricane Katrina was the biggest single natural catastrophe in Lloyd’s history with net claims of over £3bn and yet the market emerged relatively unscathed with a £103mn loss. Compare that to 9/11 when we had claims of £2bn and the market’s overall loss was £3bn.”
Other key issues identified by Ward included the recent deal between Equitas and Berkshire Hathaway, which he hoped would lead to a ratings upgrade for the market next year, and the ability to attract and accommodate private capital. Ward said this had begun to be addressed by Lloyd’s chairman Lord Levene’s recent review of the annual venture.
“We need to work together on implementing change to take this market forward,” concluded Ward.