When Lloyd’s officially opened its Chinese reinsurer, Lloyd’s Reinsurance Company (China) Ltd. (LRCCL) (See IJ web site April 17), it left the slipcases behind in London. But it brought along David Andrews, CEO of Xchanging and Alex Letts, chief executive of RI3K. Both companies are heavily involved in the drive to modernize Lloyd’s archaic processing methods.
In a telephone interview Letts said he found Shanghai, where LRCCL is headquartered, “very exciting and very innovative.” Much the same holds true for Lloyd’s new reinsurer. “All the processing is electronic,” Letts said. “It’s a model for the future.” On the Lloyd’s web site (www.lloyds.com) he noted that “in one bound Lloyd’s is showing that the industry’s most important market is also hell bent on becoming the most modern.”
Letts characterized the use of “state of the art technology” in China as “the new Lloyd’s.” It could be put in place immediately as there were “no legacy issues,” such as those Lloyd’s management deals with every day back in London. “China, however, has its own legacy issues,” Letts continued. “But with the team Lloyd’s has in place here and the support they’re getting fom London, we can see the future possibilities on a wider scale.”
LRCCL uses Xchanging’s processing software “Genius” as its core reinsurance system in China. It “will enable users to log on as either a Chinese or English speaking user and to view screens and develop reports in the appropriate language,” said the Lloyd’s bulletin.
Lloyd’s has also “purchased a global license from Internet trading service RI3K that enables business to be placed in an efficient, cost-effective and secure manner. In addition to this, the Shanghai office will make full use of the London Market’s Insurers’ Market Repository – an electronic filing cabinet that enables claims and premiums to be handled quickly and efficiently without the need for paper files.”
“RI3K assures ‘paperless trading’ capabilities,” Letts explained. Most of the business so far, and there’s already been some, is in facultative reinsurance. “There’s still a lot of face to face discussion,” said Letts, “but once the terms are agreed on, it goes full electronic between London and China in an instant.” Lloyd’s also acquired a license that enables the market to use RI3K’s Internet service “to write and place business in other territories,” which Letts described as the “next phase” in the Chinese market.
He also stressed LRCCL’s importance as a model of what’s possible, repeating his characterization of the system as showing that “in one bound” Lloyd’s has gotten ahead of the learning curve on the way to full electronic processing. “London may take more time,” Letts admitted, “but it is happening.”
“There’s been lots of progress in connecting companies to one another,” he noted. “Many of their platforms are now linked, and they are also linked to RI3K.” The company does extensive business with Aon, which has “ramped up” its electronic risk placement. It hopes to bring another “large broker” on board soon, and all of the “G-6 companies” (Amlin, Beazley, Brit, Catlin, Hiscox and Kiln), as well as Lloyd’s itself, use the RI3K platform.
Commenting on the opening of LRCCL’s offices, Lloyd’s Chief Executive Richard Ward stated: “Centrally at Lloyd’s, it is our job to provide our developing markets and existing businesses with access to the technology that will help them operate as efficiently as possible. While it is down to each individual business to decide exactly how they want to do this, we are ensuring that they have good access to the latest technology.”
Nigel Roberts, managing director of Specialist Lines for Aon Limited, chairman of its Marine Division, and a member of London’s Market Reform Group, added that a “facility like RI3K allows us to transact more business much more cost-effectively. It will allow greater volumes of business to come through the market, and will give our customers more choice.”
In conclusion Letts said, “China’s growth is exponential; it’s quite astonishing.” He said government leaders in Shanghai and the National government in Beijing are committed to working closely with LRCCL and other foreign companies to insure that Chinese industry has the capacity it needs to back future growth. “Politically, we’re all moving in the right direction,” he continued, “now we’ll see if we can make some money.”
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