Lloyd's aims to move to 100 per cent electronic shipping contracts

The insurance market plans to sign off all marine contracts using its electronic Exchange system

Lloyd's wants to extend the use of Exchange across all marine contracts, and eventually across its entire business

There will soon be no more ink drying on shipping contracts at Lloyd’s of London. By the end of the year, the world’s oldest insurance and reinsurance market expects to be able to sign off all its marine contracts using its electronic Exchange system.

In its most recent interim trading statement, Lloyd's confirmed that all its managing agents and 80 per cent of its brokers were now using Exchange. “We aim to process 100 per cent of marine endorsements through it by the end of 2010,” it said.

The electronic Exchange has been developed over the past two years, and provides a messaging service for brokers and underwriters to send and receive information between multiple parties using an XML standard known as ACORD.

An initial pilot of the system took place in June, focused on a subset of its marine exchanges – in this case contracts relating to direct hull, cargo, war and liability. After the success of that pilot, Lloyd's wants to extend the use of Exchange across all marine contracts, and eventually across its entire business. The Exchange programme is a cornerstone of its efforts to modernise its markets and drive through cost efficiencies.

In August, Sharmi Bakrania, project lead for the Exchange, confirmed that few of the managing agents and brokers using the system had integrated it with their back-office systems. While doing so will initially impose some IT overhead, in the longer term the efficiency benefits should prove compelling, she added.

And while Exchange is keen to move towards electronic contracts, it is not intended to replace one of the market’s traditions dating back to its coffeehouse days: face-to-face negotiation.