Swiss Re Throws Support To Swift Trading Platform

Swiss Re has become the first reinsurer to participate in the new Swift insurance service, which provides an automated platform for reinsurance transactions.

The platform has been created by the Belgium-based Society for Worldwide Interbank Financial Telecommunication, which operates a similar service for the banking industry. It will allow the electronic exchange of reinsurance accounting and settlement transactions as part of a pilot scheme that started with messages being exchanged between Swiss Re and brokers Aon Benfield and Willis.

“Reinsurers and brokers have for a very long time tried to standardize and digitize the information coming in from client companies,” said Peter Arbenz, chairman of the Ruschlikon industry panel and project leader on behalf of Swiss Re. “As we’re in an industry where the information comes in from the clients, it’s hard for reinsurers to standardize information; they have to ask them for the information.

“We’ve had some successes,"Arbenz told BestWeek Europe. "we’ve been successful in getting Acord standards. Now we’re looking at electronic measures. The difference from the past is that we are not trying to establish peer-to-peer standards. Instead we are looking at a central platform utility. That’s what makes this undertaking so very appealing.”

Arbenz said the process was simple. The senders (brokers and insurers) will create internal technical accounts and will then transform this information into an Acord message, which will then be sent via the Swift platform. The platform will validate the information to make sure it is correct and a message will then be sent back either acknowledging receipt of the message or querying it.

According to Arbenz, one of the benefits of the system is that there will be no replication of information, an issue of particular concern to the industry due to the possibility of mistakes creeping in via the re-keying of data.

The first messages have been exchanged between Swiss Re, Aon Benfield and Willis. Munich Re and Scor will be next to test the platform. At present, it is limited to the European business of these companies.

Arbenz said the platform will see further development. “More clients will be encouraged to join it,” he said. “And the system will be deepened, with intelligent linking of the accounting and payment process. We’re working on a strategy to enhance services for senders to attract further brokers and cedants.

The pilot scheme will run until April 2010, when it will be assessed to see if it has achieved the required levels of functionality. If it has, then the platform will be rolled out globally, including the United States and the life and health market.

The insurance/reinsurance market has not had much success with electronic methods of placing business. In January 2006, Lloyd’s announced that it was phasing out Kinnect, its centralized electronic communications initiative. After pumping 70 million pounds (88.4 million euros) of investment into Kinnect, Lloyd’s concluded it lacked flexibility (BestWire, Jan. 25, 2006). Lloyd’s Chief Executive Richard Ward had stated repeatedly that he wants Lloyd’s to reform its trading practices and move toward electronic placement (BestWire, May 7, 2007).

Another attempt at electronic reinsurance trading, Inreon, was closed down in 2003 for lack of funding (BestWire, May 7, 2003). The London-based project's main backers were Swiss Re and Munich Re, which started Inreon as a joint venture. In addition to the two reinsurers, partners included Internet Capital Group, an Internet e-commerce business, and Accenture, a management consulting and technology services company.

According to Arbenz, lessons have been learned. “We have tried to learn from the early experiences,” he said. “One thing is different -– we are focusing on the post-closing process, we are focusing on the non-competitive area. We chose Swift as it already has a successful track record with the banking industry. We are not in danger of dumping millions of pounds on things like Kinnect.

“On the other hand, Swift has a slower learning curve for insurers and reinsurers, but we have spent a lot of time with them informing about the way that the market works,” he said.

Swiss Re currently has Best's Financial Strength Rating of A (Excellent).

(By Marc Jones, London news editor: [email protected])