Martin McLachlan - Master of standard protocol

Technology lies at the centre of a battle involving insurers and brokers to gain small to medium-sized enterprises as customers. Gaining quick access to quotes cheaply and at any time is becoming vital for brokers in an increasingly competitive market.

McLachlan, who is a fellow of the Chartered Insurance Institute and has an MSc in computer science and an MBA, is working harder than ever at the fulcrum of one of the largest industry technology-driven projects to date. Although he may not be comfortable in the limelight, McLachlan's list of contacts is probably as good as those of anyone in the industry. Polaris, the London-based software house leading the project, has ready access to seminal brokers, insurers and software houses that have all contributed time and millions of pounds to the effort.

INDUSTRY BUZZ-WORD

The idea of an industry-wide standard portal was first conceived in 1999, at a regular Polaris board meeting comprising the representatives of its owners, six insurers and two brokers, McLachlan and a chairman.

Since then the portal, now known as imarket, has become an industry buzz-word. Mention it in the presence of an insurance professional and it is certain to elicit an opinion. Some are doubtful the industry can unite and make it work. Others are enthusiastic, some are openly critical and many more are cautiously optimistic.

Polaris has 20 employees in London, while partner Logica CMG has six staff in Bristol and 14 in Bangalore working on imarket. There are a host of responsibilities covering strategy, investing in new business classes, marketing, defining new products, liaising with large outsourced service suppliers such as IBM, testing software and help-desk support.

Six directors from insurers Royal & SunAlliance, Norwich Union, Allianz Cornhill, Zurich, Groupama and Axa sit on the board alongside Mark Radburn, the managing director of the Willis Commercial Network and Nick Stanton, insurer relationship director at Aon.

Others involved in imarket include new SME underwriting agency iprism, niche insurer Ace, which has developed a professional indemnity offering, the Primary Group and the Royal Bank of Scotland-owned NIG. The major software companies implementing imarket facilities include Acturis, Open GI, CDL, Software Solutions Partners, CDL, Insurecom and Sirius.

McLachlan says: "A total of 80% of the value of UK commercial insurance, excluding London, is behind this."

Several more leading insurers are expected to sign up to the portal soon. As an example of the industry's commitment to imarket Nick Southan, marketing manager at SSP, says his firm alone has invested more than £1m in imarket development this year.

Imarket's question-sets for brokers have been criticised for being unwieldy and designed by committee. However, achieving the level of consensus required for the job between the most competitive insurers in the market is no mean feat. McLachlan says: "We have managed to prove we can co-operate."

To the most frequently asked question, why bother with imarket?, McLachlan says: "This goes back to the core of business at brokers. A total of 50% of commercial lines business has errors and, even after re-keying the information three times, 20% of documents remain in error and this is not sensible."

He continues: "Imarket will give brokers access to systems, products and services with one sign-on. It is a mechanism that gives uniformity to the process and will allow for quotes to be gathered in seconds. This is good for staff and will allow them more time to spend on clients. This will replace extranets, e-mailing and faxing and save hours of processing and checking."

McLachlan also notes the brokers' concern that they are under attack from direct writers and says imarket will give them more control over the process.

When asked about the slow progress of imarket, McLachlan is honest enough to admit mistakes. He says: "Without a doubt, we over-promised in the early days but with good intentions. We felt it could be delivered faster but it took longer than we thought. That is a regret and a confession."

However, he is optimistic about the future. "Insurers are rolling out products rapidly. Imarket now has shops, offices, tradesmen, property owners and motor fleet and soon it will have commercial combined."

He adds: "We are at an interesting stage and have proved it has worked. We have put the foundation in place across the industry."

Since the first discussions of an industry-wide portal in 1999, defining cross-industry standards has become the prerogative. McLachlan reflects: "Our concern in linkage and standards are designed to exchange data. If you did not have those standards you would have individual ones and it would be a cost nightmare."

COMMON STANDARDS

The history of creating standard protocols dates back to 1993 when a feasibility study by Coopers and Lybrand called for a body to run standard protocols across the industry for insurers and brokers. A merger between Commercial Lines Market Initiative, from which many standards were derived, and Polaris in 1997 gave Polaris an opportunity to move across from its traditional personal lines base to commercial.

In July 2003, Patrick Snowball, executive chairman at Aviva's Norwich Union, said that "... by creating common standards and mechanisms, you reduce operational costs for everyone without affecting the ability to differentiate through added-value services around the core offer. Establishing industry standards is akin to setting up common roadsides and markings on a motorway - they allow you to travel at speed to your destination but they don't dictate the cargo you have in your vehicle."

He continued: "In the end the only way the industry is going to realise the true value of electronic trading is by both brokers and software houses committing to the new standard platform (Polaris imarket initiative) and actively using it."

BROKER FEARS

Some brokers fear that their own expertise or experience may not be able to be sourced through the imarket portal. However, McLachlan says: "If you have a tradesmen product on imarket then 99% of the time the questions will fit but if you have a special scheme you can put up a form in agreement with the insurer. There are already many schemes running on imarket."

He also stresses that imarket will help insurers and brokers spend more time on the complex risks and help with regulatory requirements such as product contract wording more quickly. Then, there will be the opportunity for insurers to integrate their extranets on to imarket and develop a single-access channel through the portal. McLachlan says: "This will improve security, provide a reliable communications link and a single sign-on with agreed standards and procedures."

It can work alongside electronic data interchange widely used in personal lines, another technological development that took years to establish, of which he comments, "if it isn't broke, don't try to fix it". Instead, he says: "Imarket has a different set of potentials."

CLEANER LOOK

There have been some complaints from brokers about what is on offer but McLachlan says Polaris is adapting. He says: "Brokers have commented about the web browser and the interaction between quotes, claims and accounts. We were using X-Forms, which is cumbersome technology and not easy to use. However, we have reacted to brokers' concerns and have introduced a cleaner look, made it easier to navigate and have introduced simplified data entry." This will be available from January 2007.

There have also been complaints about how the product is being sold to brokers. Stephen Wall stated at a recent Professional Broking round table: "Nobody has sat down with me and told me why this would be good for our business."

McLachlan responds to this criticism. "There are thousands of brokers in the UK. Axa's e-consultants, who sit down with brokers, definitely make a difference for them.

"However, there are many channels of communications we use such as the press, insurers and software houses. There is also an imarket information site and training animations that split up the knowledge into bite-sized chunks. In addition, we have been holding information forums around the UK." The fact that Wall has a meeting scheduled with Peter Knowles to discuss imarket is symptomatic of an organisation keen to get it right.

What are the hopes for 2007? McLachlan says: "We have realistic expectations but we are expecting more insurers to come on board. Technology initiatives are not trivial and it will become more obvious that this is a successful way of trading.

"Also, the software houses' involvement will widen and deepen. We are anticipating more products such as motor fleet, commercial combined, professional indemnity, directors' and officers', engineering and the private medical market."

McLachlan continues: "We are also anticipating more trading functions such as mid-term adjustments and renewals. It will work across the whole cycle." Axa and Acturis performed its first mid-term adjustment in September.

There are also opportunities to link up to existing insurers' extranets and add extras such as Axa's online account reconciliation platform (a similar service is also being developed by other insurers).

There has been an often-quoted phrase from Chris Hanks, general manager of Allianz Cornhill Commercial, that "there is no plan B".

McLachlan reflects: "We are not pretending imarket is perfect but what alternatives are there? It is not sensible to stay paper-based or to have to re-key into different extranets with no integration into the back office."

READY FOR TAKE-OFF

Three years on from the start of imarket, brokers are still waiting for more products and insurers to come on board. While progress may be slower than many hope, at the heart of the project there is a determination to do things properly and to make it succeed.

In September last year at a Professional Broking Broker Management Forum event Kim Kearney, former director of broker operations at Norwich Union, said: "I think we should look at what happened with electronic data interchange and not expect it to suddenly take off next year (2006). I think it is going to be 2007 before we start seeing real critical mass flowing through it." This is a sentiment McLachlan endorses.

CV

1997 Managing director, Polaris

1993 Managing director, Commercial Lines Market Initiative

1987 Member of partnership group, PA Consulting

1983 Management consultant

1976 Royal Insurance Group.