Lloyd's of London uses technology to secure U.S. markets

Rough Notes, May 2000 by Zinkewicz, Phil

"Extranet" provides numerous opportunities for MGAs

The Lloyd's of London marketplace has changed dramatically over the past decade. At the ver least, the legal problems that it faced during that time were a source of embarrassment and very well could have brought about a demise of the venerable institution. In fact, if it weren't for the input of corporate capital into the Lloyd's market, Lloyd's might have become one of the largest run-offs in the history of insurance.

But corporate capital did move into the marketplace and, at present, Lloyd's is striving to regain its onceheralded position as a world leader in insurance. It is ironic, perhaps, that Lloyd's, having suffered slings and arrows on this side of the Atlanticboth from losses in the asbestos area and from U.S. Names who sued because of those losses-is looking hard at the U.S. market for further growth. Brokers and underwriters at Lloyd's see the U.S. as a market offering myriad opportunities.

One broker, The Millers Insurance Group, is not only targeting the U.S. market for further penetration, but is also dedicated almost totally to the U.S. managing general agency community as its prime distribution system. Millers' North American Unit is a leading provider of binding authorities in the United States, and it has put technology to work for its managing general agent clients, according to Gary Clark, head of the unit.

In particular, Millers has established an "extranet" system specifically designed for MGAs and, in an interview at Clark's office in London, he says that system is his own "pet accomplishment."

"The development of this extranet demonstrates our commitment to ecommerce and technology as well as to our MGAs," Clark says. We believe that extranets will increasingly play a major role in the way we service and interact with our clients, and we plan to use our experience gained from this initiative to develop extranet capabilities for our other international clients."

Under the system, Millers' MGA clients can access a passwordprotected extranet and can look up statistics for each of their covers over a number of years, policy wordings, proposal forms and can view available covers. Aggregate exposures are available online for each county in the United States. MGAs can view these in map form to help them identify where their business originates and what exposures they are accumulating in the London market, says Clark.

In its own London-based monthly publication, The Independent Broker, Millers reports on two U.S.-based MGAs who praise Millers' extranet. Tap Johnson III, president of TAPCO Underwriters in North Carolina, has dealt with the London market for 17 years and last year produced over 60,000 certificates in London. "To stay competitive and to protect our margins, we want to automate as many processes as possible. We believe that the ability of a London broker to accept and provide data electronically will become indispensable. This is a way of the future and Millers is clearly a leader in this field."

Wayne Forest, Sr., CIW, president of Forest Insurance Facilities, CMGA, based in New Orleans, Louisiana, had this to say: "The primary benefits are speed and convenience. Before the extranet, when I needed a question answered at 4 p.m. my time, it would be nighttime in London. We would have to wait until the next morning to get answers. Now I can check my contract status or track a submission whenever I want-day or night."

Clark believes that technology will definitely enhance the way insurance transactions are conducted and he says Millers is committed to that route. "There are two responses to today's new technology. Half of the insurance business is embracing that technology They have acknowledged that it is changing the business beyond recognition and they want to be part of it," he says. "The other half is taking the `ostrich' approach. The `why' is difficult to discern. Whether it's from a lack of understanding of these new technologies or a fear of them, I don't know. But we have embraced it in a large way," he says.

However, Clark is emphatic about the use of these new technologies. He says that Millers is not selling insurance via the Internet, but rather selling value-added service. "Some U.K. companies have tried to sell insurance over the Internet, but they found that their buyers were not sophisticated enough. We've gone the other way We're working with the wholesale industry base. We provide the information services to facilitate their operations and to reduce the cost of their doing business here in London, and they do the selling."

Clark says also that the technology approach to doing business fits in with the new character at Lloyd's of London. "You don't have to go too far back to see a time when access to the Lloyd's market was via Names. But now corporate capital dominates the Lloyd's market. Corporate capital has a different outlook, a more demanding outlook. They want to know right now what their exposures are.

"The extranet approach makes it easier to deal with different time zones. Our clients can have access to our time zones even when we are shut down."