Friend or foe

It had a shaky start but, with hundreds of broker firms using the site, imarket is back in the running to be the general insurance industry’s solution to e-trading for commercial lines.

There’s just one problem: it will have to get past Open GI. Like imarket, the software house offers brokers an online hub for trading in small-package commercial lines.

Open GI is also one of the four software houses that links to imarket (see box, above right). With that relationship in mind, Simon Hughes, sales and marketing director for Open GI, insists the company’s platform,

Open Trader, is not a rival to imarket. “Open Trader complements it. Our aim has been to give our brokers choice,” he says. “They can trade via imarket or point-to-point with a panel of insurers through Open Trader.”

All the same, Chris Hanks – commercial general manager for Allianz and chairman of Polaris, the company that runs imarket on behalf of the insurance industry – believes Open GI is the biggest threat among the platform’s competitors.

“Open GI has said it is going to put its products through imarket long term, but who knows?” he says. “You can’t control the market.

“But for me, it’s common sense. If we all spend our time and energy building the common connectivity so that it’s lower cost and less complicated, it’s better than all trying to do our own thing.”

Hanks also believes the four software houses that work with imarket have been stalling on building their links: “Software houses have been very slow to build the interface. Why? Because they like the idea of building lots of linkages, because then they get more revenue. So it makes it more difficult for brokers to go elsewhere.”

He admits, however, that insurers have been slow to place their products on the platform too.

Polaris concedes that imarket hasn’t developed as quickly as expected in terms of the number of products available and its ability to integrate with the systems of more software houses. But the recent jump in broker take-up of the platform could help the momentum shift in its favour. More than 3,000 broker firms are now signed up to use imarket and, in July alone, 270 firms transacted business through the site.

Another advantage is that there is no charge for using imarket other than the cost of internet connection, whereas Open GI levies a fee. However, in Open GI’s favour, brokers will always need software houses, even if just for their administrative systems.

It remains to be seen what true impact the Open Trader platform will have on the market. It was launched to Countrywide Network brokers in October 2007 and has 132 brokers transacting business through it. General roll-out is scheduled for the end of the year.

“A relatively small percentage of package commercial business is currently traded electronically despite all quarters of the industry crying out for a workable, resilient, competitive and efficient solution. We believe Open Trader delivers all of this, as the coming months will demonstrate,” says Hughes.

He adds that a fundamental difference between Open Trader and similar initiatives is that it is fully integrated to the broker’sback office, so there is no need to enter data twice.

It is possible for brokers to go through imarket without using a software house, by building their own direct link. But few brokers have the technology platform they would need to do this. Brokers can also log on to imarket to click on links to an insurer’s extranet, where they can obtain quotes. In July, 1,241 broker firms used imarket in this way.

Hanks says: “I’m happy to maintain the extranet but I’d much rather come through [imarket]. If I build it once, I only need to worry about it once. You don’t need to worry about sign-ons, security or product differentiation because it’s all there.”

The insurer’s viewGroupama is one of the 11 insurers behind imarket. Ken Hutchinson, the company’s e-business manager, remains cautiously optimistic about the platform.

“Because it’s an industry initiative, it’s a marathon, not a sprint,” he says.

“There was always a lot of work to do. The take-up was initially slow but now we’ve got 3,000 brokers signing up, so it’s definitely being used.”

It still needs major improvement, he adds. “In terms of open-market trading, imarket needs to develop full-cycle capacity for the transactional things within products, like adjustments and renewals. Some insurers can do it but it’s not widely available.

“At the moment some brokers will use an insurer’s extranet, but that has to be rekeyed to their own back-office system. By moving to a software house [that is integrated with imarket], you don’t have to do all that rekeying.”

At the moment, e-trading is used for simpler products that can be sold as a single predefined package, such as shops, tradesman, offices and surgeries.

For more expensive and complicated products, personal advice might be required. Such products could still technically come through imarket, perhaps starting life as an email to launch a process that would eventually involve personal contact.

Whether the software houses stick with imarket or not, the shift to electronic trading for commercial insurance is finally gaining ground – welcome news for an industry whose technology is light years behind the tools used in personal lines.