Lloyd's of London, the insurance market that provides specialist underwriting services, will shutter Kinnect, the company formed around the electronic platform it designed for insurance brokers, carriers and underwriters in the U.S. and the U.K. After four years of supporting the electronic hub, which cost $122 million to build, Lloyd's will shut down Kinnect by the end of the second quarter because "the platform was not optimal in ensuring business processes for the Lloyd's and London market," said Kinnect interim chairman Michael Dawson in a release.
Lloyd's developed Kinnect as a centralized infrastructure for the insurance industry. The paperless system was expected to help achieve straight-through processing. "There was plenty of market support for Kinnect," says Thor Valdmanis, Lloyd's VP of communications for North America. "When we started to develop Kinnect, there was no other solution."
Valdmanis suggests that Kinnect failed because it was ahead of its time. Only recently have insurers begun to invest in platforms that support paperless processes, he notes, adding that now there are more-advanced systems available that support electronic transactions and peer-to-peer collaboration. "As time moved on, the technological landscape changed and a number of solutions were developed," he says.
According to Kimberly Harris-Ferrante, research VP of insurance for Gartner (Stamford, Conn.), "The industry just was not ready to embrace that model." Even with market support and good intentions, only 21 of the market's 213 companies signed up to use the platform, reported The Daily Telegraph, a London newspaper.
Lloyd's now will focus on setting standards for the industry as opposed to building a central infrastructure. "Lloyd's will continue to encourage and support the development of electronic trading platforms, peer-to-peer systems and the promulgation of data transfer standards," says the firm's Valdmanis.