London – January 2007
LONDON market brokers are demanding Lloyd’s forces its members to comply with the much-vaunted Electronic Claims File (ECF) project, after it emerged just a fraction of claims have been processed online.
At a forum, organised by The Insurance Workplace (TIW) in conjunction with the London Market Insurance Brokers’ Committee (LMBC) in London yesterday, brokers took the opportunity to air their concerns about the ECF, after it emerged that just 220 claims have been processed electronically since the system went live in December.
With 41 managing agents and 32 brokers now signed up to the project, many in the market were surprised by the lack of participation. But Trevor Maddison, senior vice-president for claims and market services at Marsh, said the statistics had distorted what is really going on.
“This only really started on January 1, 2007,” he argued. “Before that, we had been through many pilots with a small amount of managing agents. Bringing the whole [insurance] community into play will take time. There are huge changes, and this is why we have not seen the ‘Big Bang’.
“There is a transition stage and we need to work with our key members. I am not anticipating until the third or fourth quarter [of this year] that the volumes we are sending down are all new claims processed electronically.”
One professional indemnity (PI) broker said his company was not using the ECF because the benefits were not clearly visible. “As a small PI broker, we only have 200 claims in total. In our situation, there is not a huge need for us to crash into ECF. The cost benefit does not add up,” he said, adding that it would be “hard to justify” the licence costs to claims directors.
A broker from BMS said: “The case for us has been critical mass. We have been caught before on previous projects, so we do not want to invest in something that may not work. A mandate would give us a critical mass.”
On two occasions last year, at the Insurance Institute of London Lloyd’s Old Library seminar in October and at the Xchanging Conference in Brighton a month later, Lloyd’s chief executive, Richard Ward, threatened to take “whatever action needed”, including a mandate, to ensure the ECF project was a success.
Now London’s brokers are calling on Ward to deliver on his threat. “My belief is that the franchise board will mandate its agents. The days of paper are limited in this marketplace. In the next three or four years, we will not have paper. We are pressurising Lloyd’s to mandate,” said Maddison.
Roy Laker, Acord senior vice-president, added: “At present, Lloyd’s thinks it will get [electronic claims processing] done. But if volumes do not progress as they should do, then maybe it will have to mandate.”
Christopher Lee, of Lloyd’s broker Besso, also believes a mandate is essential to avoid the argument of whether ECF is a job for claims people or IT staff. “The problem is that everyone is ducking it. We are all busy so the prospect of taking on more work is inconceivable. Yes, there is a benefit, but how far down the line is that benefit? A mandate will be a way forward,” he said.
However, when asked by Insurance Day whether Lloyd’s would mandate the project, a spokesman simply referred to Ward’s previous remarks with-out making a full commitment the project.
But Jerry Adley, a consultant at Sequel Business Solutions, believes that mandate or not, the ECF will be a success. He explained: “This is going to happen and it will be a change to the market. You either do it because you have to [a mandate] and therefore you have to decide on the minimum investment, or you embrace it and get the maximum benefit.
“There is a transition period here where not everyone will come on board at the same time. You must ask yourself, how will I get the best benefit?”
Jonathan Rest, Informa.com, January 2007