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A revolution that will affect everyone in the London market is under way, and hardly anyone seems to have noticed.

During the next five years, capacity in the London insurance market will increase, it will become considerably more efficient and profitability will improve.

Great news, and probably true.

Within a decade, 75% of back room jobs will be lost. Anyone under 50 and working for an insurer or reinsurer in IT, claims, policy processing or accounting had better start planning their new career now as three out of four will be redundant by 2012.

Terrible news, and probably true.

For capital providers, there will be unprecedented opportunities, but at a price. The pressure to forego independence of action to achieve profitability in this market may be too big for some businesses to resist.

Sensationalist? No – I honestly believe that this is a conservative view. You see, there is something big afoot in the market, and not many of us have spotted it yet. It is going to make the market far more streamlined, though this has little to do with LMP. It is hugely exciting, but as dull as ditch water. It is all about technology, but it has been around for twenty years or more.

It is called Business Process Outsourcing. BPO if you have an MBA. Or, if you prefer speaking in English, try Facilities Management or simply outsourcing. If you are over 40, call it a bureau. And it is available now.

London Market history has demonstrated that, while working parties can invent streamlined working practices until they are blue in the face, material change still takes place in a geological timeframe. Witness the speed of the LMP programme, despite the obvious urgent need for everything it offers. Also witness the dismal take-up of all those e-ideas.

What will really make the difference is when someone, possibly from outside the market, comes in with a purely commercial proposition, pre-canned, ready to run, that people see a direct benefit in buying and using. The only consideration is "can I get a commercial benefit from this expense ?". No politics, no working parties, no change management. Just good old-fashioned business sense. All the world's market bodies will never negotiate solutions to match the efficiency of a working commercial proposition: the model-T Ford was not designed by a market body.

Nothing has happened yet, so why make a fuss? Well, in fact it is happening now. There are already several major players serving the London Market that have within their current product portfolios the ability to transform it into an efficient, low-cost subscription market. They are in it for pure commercial gain. Their offerings are attractive, their workforces well-trained and experienced.

Who are these people? Well, there are the larger market claims management companies for starters, such as Claims Management Group Limited (CMGL) who are already doing this, and the run-off companies and, of course, the Lloyds agencies. But don't forget the main data processing and network providers. Xchanging is the most prominent of these, and they have made it clear that their ambitions within the market stretch beyond just running the Ins-sure back office bureau. Or perhaps the outsourcing giant Capita, who are raising their profile in the London market and have taken on senior industry figures to advise them. While the market implements LMP with all the speed of plate tectonics, some of these folk are quietly putting in place everything that is necessary to take over the whole market infrastructure and run it efficiently.

They can manage anything: IT, claims, accounting, actuarial, credit control - the lot. A great big back-office operations centre in a cheap location and just enough space at the sharp end here in London to house "The London Market Claims Department".

They can lay on a single London Market IT department as well. One big core administration system linked to Xchanging's data networks, one big repository or network of repositories, one main software supplier and a nice big mainframe somewhere in Bangalore.

The only people safe in this vision are the underwriters and their managers, which makes some sense as, beyond the necessary capital requirements, they are the only pre-requisite in an underwriting market. As for the rest of us, only those with very specific and attractive skills or products can look forward with any confidence.

Ah, I hear you say, but outsourcing is yesterday's idea, with companies taking operations back in-house. Quite right, but this is different because of the scale and the unique way that almost everyone in the London Market does exactly the same thing in exactly the same way on exactly the same data. The possible savings are orders of magnitude more than the standard "should I outsource, should I not?" decision.

We all know you can write £50m premium with exactly the same back-office support as for a £5m book. An outsourcing shop could run the entire back office for 20 medium-sized underwriters at not much more than the combined running costs of two of them - 18 lots of general expenses cleared out in one fell swoop. The rest is profit and/or cheaper premiums.

Look at it from the point of view of a new entrant. It is a great market to join at the moment, but it is still quite costly to set up shop. To write a £20m book, you need just one underwriter and a bag of cash. So outsource the rest – do not turn yourself into an employment agency.

This market needs to be "virtual" more than any other. We have underwriting capital and intellect in abundance, but we also have duplicated processing costs in abundance. With one or a select few outsourcing providers, we could have a highly efficient, cost-effective subscription market with individual players bringing the underwriting capital and intellect to the table and the rest provided for an annual fee.

The catch – and there is always a catch – is that underwriters will lose swathes of independence. Anyone whose company has bought the wrong IT system will know just how difficult it is to do anything about it. Imagine what it would be like if just about everything were outsourced, especially if there were just one or two providers in the market.

Furthermore, in this new world, companies and syndicates will be expected to conform in the way they do business. With LMP and repeated warnings from senior figures of the need for its compulsion, who is to say whether, for example, followers will retain any control over their claims?

My guess is that the biggest underwriters will want to forgo the cost advantages of "London market co." and stay outside the system. A two-tier market will emerge – those who are truly independent, and those who are not.

Whether this is your vision of heaven or hell, be prepared. You have only a short time to influence the outcome.

Jeff Ward is a Director at TriSystems, the specialist supplier of IT systems and services.

-   Reinsurance Magazine