Lloyd's decision to end Xchanging's business processing monopoly has opened up opportunities for outsourcing companies
When chief executive Richard Ward described competition in the London market as a “small issue”, it was made with a smattering of tongue-in-cheek.
“I am a huge advocate of competition,” he divulged. “It encourages efficiencies and innovation, leads to a better level of service to our customers and as a result keeps markets vibrant and dynamic.”
No one would argue with that, especially not Capita Insurance Services. Last week it launched a commercial insurance division, which intends to take advantage of new found competition alive in the Lloyd’s insurance market
They will not be the only ones. Lloyd’s decision to deconstruct the monopoly that has enabled Xchanging Insurance Services (XIS) to process £62bn of insurance business annually has suddenly opened the gates to opportunities and reward.
Managing agents can now choose how they manage their business processes, which means more in-house arrangements, or perhaps more significantly, a bigger bite of the apple for outsourcers such as Capita.
With Xchanging no longer holding the golden ticket to handling services such as policy issue, premium collection and settlements, Jerry McArthur, managing director of Capita Commercial Insurance Services, eyes particular growth for the division’s London market operations.
“There are clearly agencies at Lloyd’s that are asking for an alternative.
Jerry McArthur, managing director of Capita Commercial Insurance Services
“There are clearly agencies at Lloyd’s that are asking for an alternative,” McArthur says. “But, rather than see a replacement for Xchanging the market is reforming itself and breaking the services down.”
The cultural shift away from one company providing every service is also set to bleed into the broker market with anticipation that more will follow Aon in outsourcing its entire back-office client operations division.
Ironically Aon has chosen Xchanging, which is seemingly losing its stranglehold acting as the central bureau, but Aon’s actions are interesting others.
McArthur is sensitive to the mood change. “There’s an interest across the market,” says the managing director. “Brokers have themselves realised that they have got to look at that part of their business and minimise it down.”
This is a point not lost on Aon president Dennis Mahoney, who was willing to take the bold move of removing the one thing that many brokers regard as an important part of their customer service.
The rise of competition poses threats in the familiar form of Bermuda, but it also raises opportunities and it seems that it’s not just brokers and underwriters that are alert to the change.
