Operational stresses caused by Covid-19 and remote working practices have put technology under the spotlight in the insurance sector, and clearly this is not a drill, says DQPro Co-Founder Nick Mair.
Technology, data and particularly the insurtech drive towards digitalising London’s specialty insurance market have been thrown into perspective like never before in these strange and disruptive times we find ourselves in, facing as we are a near global lockdown due to the impact of the unprecedented pandemic.
How we respond to this crisis in our industry is clearly critical on many levels, but we do have the tools and the know-how to continue to operate efficiently and make improvements to the way business is processed.
There is no escaping the fact that this crisis is highlighting the urgency of the need for modernisation,and the challenges of relying on manual processes and unstructured data governance, which are only increased in a remote working culture.
In conversation with one London market contact in recent days, they summed up the situation they face: “Now more than ever those manual, office-based processes aren’t going to work…we need to automate as much as we can.”
It’s a sentiment I know many in our market share.
Rising to the challenge
There will be better results for those organisations that have planned for business continuity challenges, or who already have robust remote working, electronic trading and digital processing systems in place.
But this is no time for ‘I told you so’, clearly this is new territory for any business no matter how prepared they were. The market-wide switch to remote working shines a light on manual processes where they are still the norm in the sector.
Ad hoc reminders and unstructured procedures to check a piece of data is accurate or up to date are that much harder when staff have limited ability to communicate face-to-face in an office environment and with limited access to systems and platforms they previously managed from their office desktop.
Legacy technology will always be an issue. Replacing everything overnight is unrealistic. A better solution is for an incremental set of steps that lead towards the destination. At the heart of the challenge is the fact that, in order to transform digitally, you must have inherent confidence in your data.
Thankfully the market has already been putting solutions in place. And since last year’s launch of the Blueprint One for building the Future at Lloyd’s, the nuts and bolts of transforming into a data-driven market have rightly been under the spotlight. Closer market integration is still necessary for the Future at Lloyd’s to be successfully realised. Interoperability is therefore going to be critical for the next round of insurtech investment at Lloyd’s.
APIs are building blocks
One way you can achieve efficiency for data spanning old and new systems, is by leaving some legacy and previously fragmented systems in place, but integrate them while adding new applications through the mechanism of APIs (application programming interfaces).
Read my recent blog Stars in their APIs for more details on what an API does and why this acronym has sparked so much discussion recently. APIs have already led to an easy win for data confidence at Lloyd’s. For example, good work has been done on the risk codes used to curate mark-to-market reference data. This links Lloyd’s master data with the data held by carriers, now more freely available using APIs.
More could still be done, however. When new risk codes are distributed to the market, say for a hurricane event, this could be automatically fed through, warning and correcting any market participants from using the wrong code, reducing re-work and improving exposure estimates.
The role of brokers
Brokers play a vital role of course in data quality in the London market, and are more often than not the main data transmitters, receivers and holders. It is the broker community therefore, which is largely responsible for underwriters’ data granularity.
And commercial insurance can have a long distribution chain, providing ample opportunities for data to lose granularity along the way. Lloyd’s in particular is a syndicated market, and like most London market business, heavily reliant on the brokers to bring business before the underwriter.
Lloyd’s has said it wants data “right first time”. Before brokers can play in their new platforms, they must first commit to providing good data, right the first time, in the correct format. That is good in a way, because it pushes the data quality issue upstream to the intermediary, from what has until now primarily been the carriers’ problem.
A data quality incentive?
However, it still needs to be easy to place business into the market. So, rather than penalise, what if Lloyd’s provided some added incentive?
At present, market participants pay a messaging charge to participate, brokers included. That charge could be reduced if a player is providing accurate data, reliably, in the right way to the right platforms.
Insurance decision-makers are only as good as the data at their fingertips, and reliable data represent the basis for taking critical decisions on a daily basis. Poor quality data leads to nervous decisions, wasted time and effort, and thanks to data duplication, can even lead to systemic errors.
The market needs to get the basics right, to be able to trust that the core data coming in is hygienic and that businesses have robust processes and controls in place to check incoming data against their standards. The better the data, the more confident the underwriter, the more efficient accurate information can move through the market, and the stronger our industry will emerge from this crisis.
We think it’s an issue around which the London market should rally and work together in the interests of everyone.
Automation is the answer. And whether you use our technology or not, our team is on hand to support you with any questions you may have about the nuts and bolts of remote working, and managing data streams across different systems and businesses at this challenging time. Please do not hesitate to ask our experts any questions.