LIKE a poker player reading his opponent, one Lloyd's of London underwriter reckoned he could tell when a particular insurance broker was lying. The giveaway was that the broker would press his index finger against his thumb as he spoke. His tic was a red light to negotiations: underwriters don't want to insure something if they don't have reliable information.
The Lloyd's insurance market is one of the last bastions of face- to-face business in the City. In Lord Rogers' stainless-steel monument in Lime Street -- the City's "Inside-Out Building" -- brokers still pass the "slips", the documents with details of the terms of insurance agreements, to underwriters seated at boxes and then perch on stools to negotiate.
Lloyd's workers proclaim the benefits of doing business in person. Despite attempts to modernise the market, they have clung on to many of its traditions too. The building's tail-coated staff are still referred to as "waiters", a hangover from Lloyd's 17th- century birth in a coffee shop. Back then, Lloyd's insured ships. Now the market is best known for its mega payouts after global disasters, from Hurricane Katrina to 9/11.
The loss book, which gives details of these big blows, claims centre stage in the underwriting room. It is still filled in: the latest entry is from a week ago when a cargo vessel from Panama sank off the Philippines.
The room's Lutine Bell doesn't clang to reveal the fate of ships any more, however -- only to mark the Remembrance Day silence. For those two minutes, one underwriter describes the atmosphere as "eerie", because the room is usually buzzing with the sounds of deals being done face-to face But in the internet age -- and with Bermuda snapping at its heels -- can the cost of doing business in person be justified?
An Aston University study is set to give the answer, subjecting Lloyd's workers and their Bermuda counterparts to a year-long fly- on-the-wall investigation. The study, which is partfunded by the Government's Economic and Social Research Council, will look at the effect that doing negotiations in person has on the pricing of insurance and where it gets placed, compared with communicating electronically -- the Bermuda way.
Lloyd's workers reel off the benefits of face-to-face discussions. "The best way to build up trust is face to face," says Bronek Masojada, the chief executive of insurer Hiscox which operates in both London and Bermuda.
On the floor at Lloyd's, one of the company's top underwriters adds between talks with brokers: "Nothing beats looking someone in the eye: you can judge a lot by their reactions. And sometimes in the general chit-chat with brokers, you get that crucial bit of information that's not in the slips."
He reckons that there are a number of disastrous deals that would have been underwritten over email, but the killer question asked in person stopped them being signed.
The underwriter sitting in the next box chips in: "It is easier to say no and send a broker away happy in person -- an email can't convey tone. …