Dave Matcham said the market’s biggest challenges for year ahead remained the modernisation of London’s operational systems and the impending implementation of Solvency II.

He added that while both were significant in their own right the pair will prove to be closely linked and interdependent.

Mr Matcham added that he remains convinced the way companies implement technology changes will have a major impact on how they deal with both issues.

“On the face of it they are separate initiatives – one is regulatory, the other technology and process change,” he said. “However, I believe that they are not mutually exclusive.

“It is estimated that up to 40% of Solvency II implementation costs are related to technology. This includes modelling software, data warehousing and consideration of data quality. Meanwhile market modernisation is a continuous improvement process as technology provides opportunities for further efficiencies.”

One of the market’s key 2010 modernisation projects is the wider implementation of ACORD data standards which will be seen in greater use of the Lloyd’s Exchange for endorsements and other peer to peer transactions between brokers and carriers, he explained.

In a statement on the association’s website Mr Matcham said that the project enables validated data to be submitted and reused without rekeying.

He added: “This initiative directly complements the need for high quality data to be available for analysis of risk and capital modelling for Solvency II. One could say that there is a regulatory imperative for insurers to be ACORD standard compatible, as this would at least give greater assurance that data received and processed by insurers will be of high quality and give regulators greater comfort that their capital modelling is adequate.

“I believe that many companies are now seeing the direct connection between data standards and internal capital modelling. So, directing resources to ACORD standards could well be a good investment decision for the future.”