By Ian Summers, CEO of Verisk
Incompatible digital practices can lead to fragmented end-to-end operations, which in turn may deter some of the already tech-hesitant companies from accelerating their digitisation initiatives.
Ian Summers explains the value of creating a centralised and streamlined digital platform with standardised regulations to guide the market through digital regeneration and ensure interoperability across the entire insurance ecosystem.
The new digital-first age has finally dawned on the London Market, and digitisation is moving ahead at pace. Blueprint Two and the shift to remote and hybrid working through the pandemic have catalysed a real sense of purpose and a new investment phase in the market. While Lloyd’s has historically driven digitisation in the market by investing large sums and extensive resources into developing central market systems, there is now an increasing willingness among brokers and insurers to collaborate and share data in pursuit of creating an efficient London ecosystem.
The dawn of a new digital age
The benefits of digital innovation are clear. According to a McKinsey report, automation could reduce the cost of a claims journey by as much as 30%. These gains aren’t just for nimble start-ups and smaller businesses – even large legacy firms could more than double their profits over 5 years by digitising existing operations. Digital transformation is mutually beneficial for all, and it is encouraging to see the commercial marketplace proactively developing the solutions it needs to realise the vision set out under Blueprint Two. However, there is still hesitancy towards digitisation, as the en masse adoption of mismatched technologies complicates processes and lines of communications, resulting in disconnects and efficiency losses further down the line.
Beware the ‘Portal Wars’ of disconnected tech
Digital transformation is specific to each business need, and there is an extensive range of digital solutions on offer to tackle these. APIs do not simply ‘plug and play’ with each other – they need careful management. As the market continues to be flooded with APIs built to different standards, this means London’s ‘Portal Wars’ will only get worse. The complex web of distinct broker, carrier, and market portals in the market – each with their own logins, API standards and data protocols – will only get harder to navigate.
Furthermore, the adoption of digital technologies has been uneven across different areas of the market, with much of the innovation that has occurred to date focused on claim settlement and back-end processes.
Here lies the London Market’s greatest challenge: how to consolidate the many different types of technology into a single standardised system. Market participants need a solution that makes doing business easier from beginning to end – not just one part of the transaction.
Digital co-operation for a symbiotic relationship
A healthy and thriving insurance ecosystem is one that supports a mutually beneficial market environment. It provides consistent data flowing seamlessly through every stage of the insurance process, allowing business to be quoted, bound and settled electronically, quickly, accurately and efficiently.
Regardless of which vendors or platforms a broker or insurer uses, this is the model the whole market should aspire to within the next year or two, with risk and policy data flowing seamlessly from end to end, overlayed with advanced tools that will help improve the quality of business written in London and the performance of its participants.
For example, the Sequel Unifying Risk Transfer Standard (SURTS), developed in collaboration with ACORD, Sequel, and a group of leading managing agents, is an open data and API standard which will allow data to travel unimpeded through the London insurance chain – and globally. It is by using systems such as this that firms will be able to seamlessly operate and co-operate, even with varied digital processes at play.
The digital future is looking bright
Digital regeneration is not limited to the next few years but is instead a continuous process that yields return on investment well into the future. Seamless interconnectivity and high-quality data will also lay the foundation for game-changing AI, machine learning, modelling and automation to be plugged into the ecosystem over time, further enhancing a participant’s ability to write the right business at the right price.
These developments can also provide a healthy choice of placement platforms – or use multiple platforms if it suits their business model – and any modern system must therefore be designed to work with as many third-party and market systems as possible.
Beyond that, data standards will allow new suppliers to continue to enter the once heavily-regulated and impenetrable market knowing there are common workflows. This creates an even playing field in which innovation and competition can flourish – a diverse and truly end-to-end digital ecosystem that will benefit the market as a whole.
All for one and one for all
Like an ecosystem in nature, market participants operate symbiotically. In order to thrive, a standardised system is needed to seamlessly connect all of these different parts together. Indeed, building an integrated ecosystem does not mean building a monopoly in which leading vendor systems and clients only interact with each other. It is about co-operation, where everyone has to win in order for anyone to gain.
Remember, even the most advanced solutions are worthless if users do not have willing and able trading partners. For London to reap the full benefits of digitisation, all market participants must be able to seamlessly communicate and transact in real-time together.
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