London bridge: Lloyd's new Blue Mountain venture is designed to ease the flow of data among insurers and brokers without forcing them to abandon proprietary systems. (E-Fusion Conference: Standards; Technology).

A new venture sponsored by Lloyd's is promising to solve a stubborn and costly riddle--how to move data among insurers and brokers without errors, and without forcing them to abandon their proprietary systems.

Project Blue Mountain is aimed at eliminating a major source of inefficiency that arises whenever risk and claims data move from one company to another--the need to re-enter information in a format the recipient can use--said Ashok Gupta, chief executive officer of Blue Mountain. He had overseen the launch of lloyds.com, the Lloyd's market's Web portal.

Half of all commercial policies that are processed have errors in them, and 65% of those mistakes are "re-keying" errors, Gupta said. One company, he said, found that its professional indemnity team spent 45% of its time on administrative tasks.

"We believe we can eliminate huge swaths of this inefficiency," Gupta said.

Blue Mountain isn't the first effort to create a bridge for moving data across the industry, and many of its predecessors have failed. Gupta said this venture would distinguish itself through technology, flexibility and the strength of its management and sponsorship--but most of all through its approach to standards, the Achilles' heel of many previous efforts.

"We cannot impose standards on anyone," he said. Instead, companies will continue to use their own systems, and Blue Mountain will act as a data-mapping hub in the center, converting data from the sender's format to fit the recipient's in-house systems.

Blue Mountain is slated to begin testing with a small group of users in three lines of insurance in the first quarter of next year. The plan is to roll it out gradually to more customers as the year progresses. The aim is to have six segments operating, with 50 to 80 customers, by the end of 2004, positioning Blue Mountain for a broader rollout in 2005. Gupta stressed a measured process of making certain the system works before expanding it. In reinsurance, for example, Blue Mountain has capabilities in facultative business, but not treaty, pending further discussions with reinsurers, he said.

Another facet of Blue Mountain is its planned relationship with Ins-Sure, the Lloyd's-supported back-office venture serving the London market. InsSure and Blue Mountain will build an interface so that together, front- and back-office operations will be covered by intercompany platforms sponsored by Lloyd's.

Collaboration is at the heart of Blue Mountain's mission. Gupta noted that one recent study identified $39 billion of potential savings in the insurance industry through the intelligent use of technology. But of that amount, he said, only 30% can be achieved internally, while the remainder depends on collaboration across companies.

"We're not going to prosper with 40% frictional costs, nor do we deserve to do so," Gupta declared. The way forward, he said, is through "collaboration and connectivity."

Blue Mountain users will choose which of its capabilities to use, and what data to put into the system's templates, Gupta said. Custom interfaces will be built according to each user's needs, even allowing, for example, a broker to put its own brand on that interface. Brokers will have the option to give clients, such as corporate risk managers, the ability to enter risks into the system.

Users will pay up front to implement the system and probably will pay membership fees--but no transaction fees. "We're not keen on transaction fees because we don't want to create a disincentive to use it," Gupta said. Blue Mountain also plans eventually to bring in additional investors.

Gupta stressed that Blue Mountain isn't intended to become an exchange where business is placed, and therefore brokers shouldn't fear it. It will give Lloyd's an "early mover advantage," but at the same time, he said, "It can't be Lloyd's-centric. If it is, it will fail."

RELATED ARTICLE: Bridge Builders 

Blue Mountain is the latest of many efforts to build bridges for moving data among insurers' incompatible, proprietary systems. Some others from the past and present:

* LIMNET-London Insurance Market Network

* RINET-Reinsurance and Insurance Network

* WIN-World Insurance Network

* WISe-Worldwide Insurance E-Commerce Group, formed through the merger of LIMNET, RINET and WIN in 1999.

* Joint Venture standards--a project launched in 1992 by U.S., U.K. and European standards bodies, taken over by ACORD through a merger of ACORD and WISe activities in 2001.

* eMerge, SMILe--Respective standards projects of ACORD and eEG7, a European standards group, now set to be harmonized.