The September revolution

During the early third quarter of 2006, there will be a watershed moment in the London insurance market. It may pass unnoticed - except by a small inner circle - but it will be as significant as any structural change.

The death of Kinnect was seen by some as the end of any potential electronic infrastructure for the London market. The opposite seems to have been the case.

Indeed, the Kinnect closure seems to have been the biggest catalyst for modernisation ever seen in the market. Since that moment, plans for a revolution have been hatched.

One major broker is rolling out an offering that will give electronic access to the entire London market via the web. The London back-office provider, XIS, reconfigured itself electronically to slash its processing costs.

Our own RI3K, the electronic distribution service, which is the link between broker, markets and XIS, will offer commercial insurance, not just reinsurance. Meantime, managing agents are putting in messaging gateways to handle electronic traffic. In fact, the electronic infrastructure that many believed could never be built largely exists and the remaining effort needs to go into piecing it together into a simple framework for all.

Electronic trading will begin its roll out for the London market this September. Regional brokers will see dramatic change. There will be a central log on to access the entire market, not individual web sites for individual insurers, and this electronic marketplace will save time and effort and be open to regional brokers.

Secondly, because wholesale risks will be processed by London brokers without any data re-entry, London brokers will rapidly rediscover their waning appetite for smaller, lower premium risks and will be able to zip commoditisable risks through the market much more profitably.

No-one is pretending there will be another Big Bang in September. But the first salvo of the revolution will be fired. It will take some months to roll out to all brokers and all product lines, but the revolution will spread through the market like a bushfire.