Another division separating large international insurance organizations from their financial services counterparts evaporated recently as the Brussels-based Society for Worldwide Interbank Financial Telecommunications (SWIFT) voted to include insurance companies as participants on its international financial communications network.
SWIFT is an industry-owned cooperative that supplies secure messaging services and interface software to financial institutions worldwide. Its communications network carried 1.2 billion messages in 2000, with an average daily value of payment messages in excess of $5 trillion.
Large, internationally active insurance companies would be able to use the SWIFT network to manage financial transactions around the buying, selling and settlement of securities transactions, says Dave Potterton, research director, e-Financial Services, Meridien Research (Newton, MA). Insurance companies currently manage these transactions through proprietary networks, such as virtual private networks and other private electronic channels, Potterton says. The attraction of SWIFT is the opportunity to "take advantage of the global nature of that network and its infrastructure, as well as the security that goes with it. And certainly a lot of their bank clients are on it, as well."
Traditionally limited to communications among banks and other financial institutions, SWIFT has opened its doors in recent years to other financial industry intermediaries such as brokers, exchanges and asset managers, according to Simon Cleary, head of securities markets, SWIFT. "But because insurance companies are very important fund managers, it was essential that they be able to join the network," he says.
Ultimately, SWIFT's move may have less to do with new opportunities for insurers, and more with the organization's efforts to serve the interests and convenience of its banking shareholders, according to Meridien's Potterton. "I don't think it's anything that insurance companies are jumping on, by any stretch of the imagination," he says. Potterton suggests the consortium's bank members are likely to benefit from more of their clients being able to deal directly with them on the network, rather than having to manage connections with multiple private networks. "SWIFT wouldn't have opened this up without pressure from the banks," he says.
Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio