Opinion: Global Complex Risk Market is Defined By Automated Data

Six months ago, the Lloyd’s market made a bold statement about how it would improve its processes and use of technology. The Future at Lloyd’s, or F@L, suggests significant changes are ahead. Ian Gibbard, Senior Sales Executive at Guidewire Software takes a look at the progress being made.

It is worth quoting verbatim from the F@L and Blueprint One documents, because they set out clear vision, namely: “The Lloyd’s ecosystem will be the global marketplace to buy and sell insurance, offering a one-stop shop of high-quality, cost-efficient products and services to cover even the most complex risk needs. It will comprise six integrated solutions that together provide exceptional value for customers and market participants.”.

When I read this, it was evident to me that this new blueprint suggested a decisive moment, and that the market knew it needed something more than an LM TOM 3. Delivering exceptional value to customers means that it is more important than ever that the focus of technology reform is on customer service as well as efficiency. Every process, element of information technology, or regulatory project, and pound spent, needs to be focused on that one goal. Success will require a major shift in thinking, investment, and rewards to a culture of continuous improvement in customer service and cost reduction. This is challenging but hugely exciting for the market.

So, what is the best route to take?

Returning to those six integrated solutions, three of them – Risk Exchange, Complex Risk and a reimagining of Claims – are to be underpinned by new central systems which will help the market deliver more transparency, automation, and data driven decisions. There is some devil in the detail in this, of course. These new integrated solutions will require communication and interaction with carriers’ and brokers’ systems in ways yet undefined.

The technology brief challenges how the market has traditionally developed and deployed technology. The software vendors who have served the market well for many years have traditionally been niche suppliers. In fact, my first job was designing in-house systems for Lloyd’s managing agency, Cassidy, David Ltd, followed by working for several niche suppliers in the 1990s.

What I saw and did with these niche vendors was to develop and deliver capable and appropriate platforms that were intrinsically designed to support and often mimic manual or asynchronous central services and data. Or, to put it in terminology that your London Market parents would understand, the underwriting information system was made to look like an LPSO (Lloyd’s Policy Signing Office) record.

Does this sound appropriate for the new requirements? In my mind it does not. Indeed, the refreshing ambition of the new process and technology reforms seems far removed from what niche solutions have done in recent past.

Further, such niche bespoke solutions were fine when there were hundreds of syndicates all working together and not looking outside of EC3 for capital or business. But times have changed with the top eight or nine managing agents now representing half of the market by gross written premium (GWP). They did not get to this commanding position by focusing solely on London. The reality is they are global carriers, or they are the London specialty branch of US, German or Japanese insurers.

The globalisation of the London Market changes what is needed in terms of technology. The increased pressure to minimise costs and maximise flexibility makes a purely homegrown London Market software platform a technical dead end. As the market looks to maintain relevance and competitiveness, it needs to rethink its technology model to avoid inhibiting the growth and interoperability that are so essential.

Indeed, the market reforms are very much about arming the market for a global present and future. The goal of Blueprint One is to transform Lloyd’s into the most advanced marketplace in the world. This is articulated as becoming “the global marketplace to buy and sell insurance, offering a one-stop shop of high-quality, cost-efficient products and services to cover even the most complex risk needs.”

So, the natural route for the market is to look at how major insurance carriers are adopting modern integrated insurance software platforms. In the case of Guidewire, the platform that supports policy, claims management, omnichannel with state of the art digital customer interactions, and data analytics, is enterprise-class technology that is proven to work and scale for global demand with ease and great cost efficiency.

With its determination to be a global force, adopting global insurance software platforms makes sense – why re-invent the wheel to write a global insurance platform when very good ones already exist today and are being used by many market members already?

Some might argue there would be a loss of competitive advantage by moving from super-tailored niche vendors to a more common software platform. Surely as a specialist insurance market, Lloyd’s needs specialist insurance technology?

Modern software platforms can enable greater customisation and flexibility, whilst easily encompassing the small number of unique processes that the London Market utilises. For example, the Guidewire platform is accompanied by a fast-growing ecosystem of specialist insurtechs and others who can plug their capabilities into the platform and make these add-ons available via a marketplace that acts rather like an app store. The commitment to open APIs will encourage this ecosystem to grow and innovate.

Adopting modern software platforms also provides a route for the market to consider how it might exploit the movement of data and applications into public cloud services. These offer huge opportunities. Again, why attempt to make this transition alone when some platforms can already offer cloud as well as managed options?

Whatever the Future at Lloyd’s document asks of the London Market in the future – carrier-led coinsurance, peer-to-peer settlement, decision support for smart underwriting and claims, customer and broker digital portals or non-English language user interfaces – it is clear that the only type of platform to invest in is one that is enterprise scalable, proven, and with the widest global customer base.

The future of Lloyd’s is, in the words of its CEO John Neal, a re-imagining of the market. It is exciting how fundamental data and technology will be in this transformation, and it will be important that Lloyd’s looks externally to ensure it draws on the very best ideas, innovations, and expertise to succeed. Taking a parochial approach to technology choices will be unproductive and not in the spirit of an institution whose success comes from taking an always larger, global perspective on risks and opportunities.

This article was produced in association with Guidewire UK.

About alastair walker 11372 Articles
20 years experience as a journalist and magazine editor. I'm your contact for press releases, events, news and commercial opportunities at Insurance-Edge.Net

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