UK commercial lines insurers are wasting £1bn ($1.42bn) each year through inefficient transaction handling, a leading figure in the financial services industry has claimed.
Sir Brian Pitman, former chairman of Lloyds TSB, said: "The commercial lines insurance industry is currently fragmented and extremely inefficient".
"With large amounts of duplication, manual processes, errors and incompatible systems absorbing 34% of all premiums, it is no wonder that the sector is struggling to make a profit".
On a European basis, transactional costs are estimated to be around €21bn, ($18.58bn).
Sir Brian was speaking at the launch of an insurance technology company he is chairing named Acturis, which is funded by London venture capital and will serve brokers, he warned:
"Both brokers and insurers must act quickly to reduce costs and improve service levels and profitability".
Acturis said half of all UK independent regional brokers had yet to create a website.
More than 50% of documents sent to brokers by insurers were incorrect, and needed to be resent. Of those resent, 30% were still incorrect.
More than 35% of client documents took well over 100 days from the time received by the broker to being issued to the client. Only 8% of documents were emailed.
Acturis plans to introduce early in 2002 its web based technology platform to support administration; and provide a mechanism to create new products and services quickly.
It will be entering a fiercely competitive market in web support for transactions, albeit one still in its infancy.
Joint chief executive David McDonald spoke of the danger that technology alone would reinforce existing efficiencies. His company's system would offer brokers process redesign, and product and service innovation.
The company is working with businesses including brokers Bland Bankart and Smart & Cook, and insurers including Independent and Norwich Union.
The venture originated from a project known as Riskline and backed by a £10m development for one of its partners, Nedcor, one of the biggest financial services groups in South Africa.