Friday, 21 December 2007

100% ECF and a Partridge in a Pear Tree

ACORD's London office hosted a very nice Christmas champagne breakfast this morning for those involved in using ACORD standards to do electronically in London what is now done by paper.

Andy Brookes runs the Market Reform Office and acts as a program manager for underwriters and brokers and has his finger on the pulse of progress. I asked about how many claims are "in scope" to get a sense of the true progress to date, I wanted some clarification to the goals set in the Lloyd's 3 Year Plan.

Andy explained that 80% of all new claims brought to the market are "in scope" for Electronic Claims File (ECF). Of this 80%, the market has achieved 60% conversion from paper.

In Accounting & Settlement, paper processing is expected to be retired on 100% of new deals by the end of March 2008.

All of this electronic processing is conducted through the Insurers Market Repository (IMR). Now that the Web Connectivity gateway is operational, the IMR is processing over 30,000 claims and A&S document messages per week. Notably, gateway traffic (ACORD DRI messages) accounts for the majority of IMR activity (the remainder being direct upload by website which means double-keying by brokers).

This is real progress on back-office processing. Advisen will follow this story closely on Front Page News.

Friday, 14 December 2007

Lloyd's, a 3 Year Plan

Yesterday Lloyd's of London issued its updated 3 year plan covering 2008-2010. On the heels of announcing 6-months results this fall of £1.8b in pre-tax profit, and with an influx of new capital providers (Goldman Sachs, Bank of America to name a few), and Lloyd's Managing Agents like Kiln fetching nice valuations in the M&A market (story here) you would assume that all is well.

The report details why there is major cause for concern.

First among these concerns is the soft market - see the chart of Advisen's premium index to the right. Insurance pricing continues to fall and with a benign claims environment, there is no sign of a reversal in this pricing trend (even in the face of mounting subprime losses sure to trigger D&O claims).

Lloyd's offers a unique platform for underwriting investment (carrot) and polices underwriting discipline to protect its Central Fund (stick). While total capacity will shrink slightly in 2008 at Lloyd's, underwriters are keeping their clients after years of fighting to win this business. Dave Bradford of Advisen wrote about this in "The Myth of Underwriting Discipline" in the latest edition of Insider Quarterly.

Second among concerns facing Lloyd's is the cost of doing business at Lloyd's both in terms of processing and taxation, with the report citing global competition as a threat.

Lloyd's is key to driving a change agenda for processing online versus by paper and will miss its goal to have all "in-scope" claims filed electronically by the end of 2007. Lloyd's currently processes 60% of "in-scope" claims files online.
The 3 year plan sets the goal of all claims to be filed electronically by the end of 2008, meaning that all claims will be "in-scope". Further, the goal is for all Accounting & Settlement to flow through the online repository by July 2008.
There are two ways from brokers and underwriters to achieve this goal:
1) re-keying and copying files to the repository web sites
2) having electronic filing be part of the regular workflow
Clearly the second option with the integration via ACORD messaging gateways is the preferred route and I hope Lloyd's will encourage more brokers and underwriters to sign up for Web Connectivity.
Last among the concerns I highlight is a need for better information. In a soft market where underwriters are tempted to relax their scutiny of the risk and chase the rates down to keep their business, tools like Advisen are more in need than ever.
According to the 3 year plan, the trading floor at Lloyd's is here to stay but much is said about Lloyd's "as an institution, not a place" and that access to this institution needs to be easier. Together with the dedicated staff at Web Connectivity, the Advisen London office works hard to help Lloyd's brokers and managing agents achieve these goals.

Thursday, 13 December 2007

Time Warp in London

Walk down Lime Street in London, it will shock you.
All around you will see progress, old buildings torn down in favor of modern architecture.

But don't look up for too long or you will bump into a broker carrying armfuls of paper. Literally folders and folders of new policies or changes to existing policies, or if it's an attractive, young female broker, odds are that she'll be carrying a claim to Lloyd's.
The fact that this market still processes trades by paper is just incredible to me. The stock market has been clearing trades electronically for decades, and in the mid-'90s I was part of a team at Bloomberg that helped fund managers trade bonds online.
"Market Reform" is a key initiative of Richard Ward's and there is much progress Web Connectivity is a leading agent for change. Advisen invested in Web Connectivity and is helping to take their ACORD messaging gateway to Bermuda and the US.

The Subprime Century Mark

Advisen now details 101 different large loss events and actions related to the Subprime lending debacle. Subprime is one of over 425 root causes to which the 7,500 loss events in Advisen's loss database are linked. The breakdown by case type:

19 Fraudulent Trade Practices
1 Banking Malpractice
4 Derivative Action
11 ERISA Class Action
5 Other
1 Legal Malpractice
2 Auditing Malpractice
11 Underwriting Malpractice
47 Securities Related

Additionally, the regulatory actions include:
• The SEC opening at least 12 investigations into potential securities fraud with respect to securitization and sale of sub-prime loans.
• Regulators looking into predatory sales tactics used by mortgage lenders.
• NYAG investigating inflated appraisals.
• EU announcing an investigation into rating agencies.
• FSA published review of UK sub-prime market criticising bother brokers and lender and referring 5 firms to enforcement actions.

Exposures to the insurance industry could affect policies covering:
• Directors & Officers Liability
• Fiduciary Liability
• Partnership Liability
• Errors & Omissions
• Lawyers
• Auditors
• Financial institutions
• Credit Risk Insurance

Monday, 10 December 2007

Subprime case database now 86

No sooner had we quoted 80 cases for today's Daily Telegraph article did we add 6 more cases, bringing the total to 86. A little over two weeks ago I was quoted saying the database would double in six months' time, it's just about happened already.

In addition to the big news that US States Attorneys General are issuing subpoenas, the recent filings we're tracking include cases against:

Morgan Keegan, Inc. (Securities Class Action)
Morgan Asset Management (Securities Class Action)
Regions Financial Corporation (Underwriting Malpractice)
PricewatehouseCoopers LLP (Auditing Malpractice)

All of these cases are available in Advisen.


Congratulations to our friends at TIW for picking up an award at this year's Insurance Day Awards dinner.

Using the gateway from Web Connectivity, TIW built an easy way for brokers in the London market to communicate accounting, settlement and claims information.

For brokers wishing to integrate with in-house or vendor-bought document management systems, the full Web Connectivity gateway is the choice.

Advisen is a strong supporter of accelerated market reform in the Lloyd's and London market through its investment in Web Connectivity and through engaging the Bermuda and US markets using the Web Connectivity gateway.

See yours truly at the play-money blackjack table at last year's Insurance Day awards - £10 of real money to the first reader to guess who was to my left...

Friday, 7 December 2007

Small Businesses & Web 2.0

Alan Meckler posted yesterday about the over-hyping of Web 2.0 citing a good story on about how small business owners need to have clear ROI before engaging in blogging, wikis, social networking, etc.

The report covered in the article says that these small business owners are twice as likely to care about e-mail newsletters and having quizzes and calculators on their site rather than blogs or wikis or social networking.

I will need to read the report to see if the businesses rely on internet marketing or if their web site and internet marketing are not core.

We're forming our 2008 marketing plan at Advisen and determining exactly where some Web 2.0 products could help. Our goals are to deliver great content to new and existing readers and to drive them to consider the premium product as well to deliver a higher level of customer service by informing our clients about new information and analysis that is relevant to their book of business. We want to do this with technology versus more staff.

Advisen's #1 marketing tool is a series of vertical e-mail newsletters and Advisen has had great marketing success with topical surveys so we have some of the "web 1.0" bases covered.

In terms of web 2.0, I started this blog in large part to learn how blogging has helped other businesses and to show our team that it is not too difficult. We launched one in 2004 that covered the Spitzer investigations into the insurance industry and I'm very pleased to see that our developers have installed new software and that we will launch a new blog soon, likely to cover the developing subprime story for commercial insurance professionals.

I'm particularly delighted that they built the blog into the navigation like our newsletter so that with the first release of the blog we will not only show in natural search engine resuls but also drive interest in our premium subscription offering.

If I've learned anything from Alan it's that you can't be all things to all people, small businesses can become bigger businesses by publishing vertical content. We are betting that social media can generate additional vertical content and help achieve our goals for growth and a higher level of service to premium customers.

Tuesday, 4 December 2007

Further D&O Exposure?

There have been many predictable types of actions taken against companies related to the subprime meltdown.

The newer actions are less predictable and more interesting.

Advisen's database of large losses now tallies 76 actions related to subprime. But as noted by Kevin Lacroix on the D&O Diary (here) the exposures by undisciplined loan underwriting are likely to blow up in credit card, auto loans, commercial real estate and perhaps beyond.

As Advisen has pointed out, this is the tip of the iceberg. While subprime mortgage defaults can be predicted to peak and then fall off (there is no new issuance), the ripple effect of this credit crunch will mean increased D&O exposure for many types of companies that have exhibited poor loan underwriting.

Since the success of new and different cases may depend on the ability for plaintiffs to win subprime cases, readers will be interested in following the developing story on Front Page News, in Advisen's database of cases and indeed on excellent blogs such as Kevin's.

Monday, 3 December 2007


Chaucer Syndicates Ltd is the latest Lloyd's Managing Agent to take Web Connectivity's ACORD messaging gateway. More than half of Lloyd's capacity can now communicate electronically, with Web Connectivity having 90% marketshare.

Aon has been a leader in the drive to replacing paper-based communication with online messaging and Ian Summers, Director of Change Strategy, Aon added, "Implementation of Web Connectivity will enable Chaucer to benefit from secure, seamless data and document transfer, one of the key benefits of the new system."

Friday, 30 November 2007

Have Sponsors, Need Inventory

Advertising on Advisen Front Page News works.

Among our returning sponsors, FM Global buys through Ogilvy & Mather because of the results.

The next stage in developing this growing revenue stream for Advisen is to spawn new inventory. Social media applications can help and I was encouraged about the pace of adoption this post from Marketing Week.

As a goal for our product development and ad sales team it's possible, that just like Adivsen published the first social network for the commercial insurance industry, that Advisen will take the first social-media advertising buy in the commercial insurance industry.

Proliferating Plaintiffs

Thanks to comments to this blog by Ed Vincent, Advisen's Product Manager, I was made aware that our database of sub-prime related suits has swelled from 47 as announced in the Daily Telegraph on Monday to 73 as of yesterday.

Being in an overseas office I don't hear the office chatter or sales calls talking about these amazing developments in our product. Little did I know that my blog would serve to keep me updated by colleagues in New York who read it.

In relating the news about more subprime cases to my customers this morning, my favorite comment was from an underwriter who said, "Mason. Many thanks for the update. The claims are building quite nicely. Unfortunately it is having no effect on premiums yet!" Comments from Risk Managers did not use the term "unfortunately" ...

Recent actions include the following (defendant and type of action):

The Bear Stearns Companies Inc. (Derivative Shareholder Action)
HSBC Holdings Plc (Breach of Contract)
The Bear Stearns Companies Inc. (Securities Fraud)
Fremont General Corporation (Banking Malpractice)
Barclays Capital (Breach of Contract)
Credit Suisse (USA), Inc. (Securities Fraud)
The Bank of New York Company, Inc. (Securities Fraud)
State Street Corporation (ERISA Class Action)
First Franklin Financial Corporation (Fraudulent Trade Practices)
HSBC Finance Corporation (Fraudulent Trade Practices)
Washington Mutual, Inc. (Fraudulent Trade Practices)

Thursday, 29 November 2007

Just Do It

In the couple of weeks since I started blogging:

1) A colleague at Advisen started a blog to promote a series of educational initiatives for our subscribers. Very little of our freely-available content shows up in Google searches. Blogging allows us to target particular niches of the insurance industry with relevant content and to offer sponsors additional ways to connect with our audience. We are also looking to link to other bloggers with great content relevant to commercial insurance professionals.

2) I relayed an idea to Fred Wilson who's AVC Blog I read daily and Fred responded with a nice note.

You have to start somewhere and I can see more of where it can lead.

Monday, 26 November 2007

Piece of Cake

Getting a successful internet start-up from idea to execution sounds easy these days. It's not. Just when you have dug in with late nights and long weeks to deliver a project, you dig deeper to deliver the next one. You have to believe, despite hearing "no" a lot.

Having just finished reading "1776" I'm struck by the parallel ups-and-downs with the early days of the business. Apparently George Washington's most-used word in motivating his officers was "perseverance".

Steve Carpenter married my stepsister and has believed in his manifest destiny to found a successful internet business. After Harvard Business School, Steve brought an idea to market and I congratulate him for his perseverance in launching Cake Financial. See their write-up in Forbes here.

Subprime cases near 50

I was quoted in an article on the front page of the Business section in today's Daily Telegraph (a national daily newspaper in the UK with circulation just over 900,000) about the proliferation of lawsuits stemming from the U.S. subprime meltdown. This is a fast-developing story you can follow on Advisen Front Page News.

The story picks up on how Moody's and S&P have been targeted for assigning "excessively high ratings to bonds backed by risky sub-prime mortgages". All of the source material for this article came from our database of nearly 7,000 significant cases that impact the commercial insurance industry.

Pride in a portfolio company

As the year comes to a close we as a society go list-crazy. Not to miss out on the fun, I just noted that Web Connectivity, Advisen's first corporate investment, has achieved a well-known client list including 4 Fortune 250 companies and 6 FTSE 250 companies.

Web Connectivity is the leading provider of ACORD messaging solutions (gateways).

Wednesday, 21 November 2007

Service in the UK

In a country where 75% of GDP is from the "service sectors" (the other 24% is in "industry" and 1% in "agriculture"), we're consistently appalled at the poor level of service in the UK.

For example, when we moved here it took 5 weeks to get cable installed. When the cable guys called to say that they were finally coming, they announced that if they got a parking ticket they would bill me for it.

Or today, I called British Gas because I have paid my bills yet have received a string of letters, the latest threatening legal action against me. Turns out that they had created a new (and incorrect) account and that my original account was not only current, but I was ahead on payments. At least there was an apology.

Then BT calls just as I'm explaining this situation to a friend. BT wants to "improve their levels of service" and asked about a recent service request I had made of BT (which I told him had actually gone well). When he heard it had been my intern who had made the request, and not me, he didn't say anything, he just hung up. I feel reassured that he'll be the one training new service reps at BT.

There just isn't enough competition here among service providers.

Tuesday, 20 November 2007

America's Next Export: Class Action Suits?

Advisen co-founder and head of market research Dave Bradford recently reported on the trends towards plaintiffs ability to bringing security class action suits in Europe.

Global underwriter Zurich produced a tremendous conference to educate its customers on the subject of insuring Directors & Officers globally. If you haven't spoken with panelist Francis Kean, a Partner in the Insurance practice of law firm Barlow, Lyde & Gilberg, you are missing a unique combination of smarts, perspective & sociability.

In explaining how the UK is moving faster than most countries in adopting US-style class actions, Francis explained the ramifications of the new Companies Act and in particular Section 172. See an article in today's Insurance Insider for more.

Speaking to many

Atop my list of reasons why social media helps in measurable ways is how easy one speaks with many. Key to Bloomberg's success was our key which enabled bond salesperson communication with many customers simultaneously.

Today I saw another great example of this from Advisen's PR all star. Patrick Ward and his team at 104West represent a series of new customers. Using the technology from one of these new firms (Goldmail), Patrick sent a video by e-mail with voice-over a slide show talking about these clients and proudly showing off his new offices and growing team. It was very effective communication.

Among the new customers was Hivelive which offers white-labeled social media applications for plug-in and they appear to stand out in a crowd because their tools enable the readers to configure the social media apps rather than the publishers.

It just goes to show that because I respect Patrick's views, I took the time to look at all 7 of the new clients mentioned. Patrick, if he took the time to think it through, would realize Advisen would be interested in some of these. New media/social media saved him that time and maybe gave HiveLive a lead.

Monday, 19 November 2007

Efficiency measured

Glen Carey, a most innovative member of our sales staff, has landed a new brokerage client for Advisen by showing to the head of the office of a regional broker in the US a worksheet that proves that if a member of his staff used Advisen that they would cut 75% of their time comparing insurance underwriter coverage terms for customers.

If the broker only used Advisen twice per week, they would pay for their entire annual subscription through this cost savings, not to mention the opportunity cost from using the saved time on new business or additional customer retention activity.

Advisen is used by nearly 200 retail and wholesale brokerage firms.

Tail wagging the dog

At the recent ACORD Forum in London, Alex Letts, the high-profile CEO of RI3K, commented about how he wished the ACORD standards would be frozen for awhile, that there have been too many changes. Further, Alex said that the London market slip that brokers bring around to underwriters should be frozen.

Roger Townsend, head of Xchanging Ins-Sure Services, disagreed from the same panel and the crowd was also aghast. Andy Brookes of the Market Reform Programme Office asked if we hadn't moved on from the IT tail wagging the business dog.

Imagine my surprise today at reading an article on the subject in the Insurance Times. Why did Alex push this?

In an industry that is so clearly in need of change and where the market is constantly reacting to the evolving needs of corporate clients, how could the slip be frozen?

Web Connectivity and other vendors don't have trouble keeping up with the ACORD standards.

Facebook as a business debate

Two people I respect greatly have recently commented about Facebook and really all social networking. Eliot Pierce who has been a force for good at NY Times Online says he's in the "Facebook is not a business" camp.

Alan Meckler, CEO of Jupitermedia, blogged about about it here pointing out that value will be in vertical social networking (see my earlier post about sphinn). Alan has made a number of fortunes by providing targeted information to niche audiences and brokering this audience to relevant sponsors. I suggested to Alan that he should start or buy a site that would appeal to interactive marketers who are beginning to include social networks in their media buys (agencies are assigning full-time specialists to them). Generally Alan is skeptical about the true (and long-term) value of generalist sites like Facebook.

Have a look at the discussion thread following a post by Fred Wilson which reinforces Alan's point.

There is no seamless approach to anything these days. Key to technology project success is proper stitching of the seams based on thoughtful planning. The same will hold true with social media - it will be the social middleware that will enable vertical communities to reach outside "the club" as needed. How the middleware providers make money while the networks own the page views is beyond me at this point.

The Monty Hall of Search Marketing?

And behind Door Number Three...

Chris Elwell and Danny Sullivan, colleagues while at establishing Search Engine Strategies as the runaway leader in the space, have teamed up to start a new network of information websites and associated trade shows for marketing professionals.

Third Door Media debuted its fast-growing Search Marketing Expo series in London last week.

We got to spend Friday night with Chris re-telling our favorite stories (we didn't even get to the one about the ad salesguy at who regularly wore black leather pants to the office - a clear sign of the end of the bubble that we clearly missed).

I'm now looking at sphinn which is packed with content generated by search engine/interactive marketers - a great example of a business application of social media.

Saturday, 17 November 2007

Could criminals be that dumb?

Credit card fraud has happened to us twice in one year since moving to London. This time it won't take Sherlock Holmes to catch the person.

The genius who got his hands on my credit card info used it to buy some mail order items through their cable box, to pay for his congestion charges, and to pay off some car or life insurance. With all of these easily tied back to a person if the police were to look into it, the only question is will they bother or will HSBC just eat the £1000.

Friday, 16 November 2007

News for the commercial insurance professional

Front Page News by Advisen, a daily news service with 75,000 subscribers, is evolving.

This week we framed it within the information and analytics platform navigation as a first step towards contextual linking from the hugely-popular news stories to relevant data and analytics in the subscriber-only areas of

We also envision adding additional content from other sources (blogs) and user-generated content (comments, discussion forums, social networking for business, etc.). In this way we can offer news-only subscribers to further research based on their market niche. Yesterday Dave Panos, Founder & CEO, of Pluck came by our London office to discuss how his service could help with both of these. Would you suggest any other providers?