A gale of change is silently blowing through the London market
Blog -- 29 April 2021
Author: Ian Summers, CEO, Sequel
Blueprint Two – the implementation roadmap for digitisation launched by Lloyd’s in November 2020 – was designed, among other objectives, to drive new behaviors in the market. From what we have seen so far, it is working. London firms are being much more proactive in their pursuit of digital so-lutions and, now more than ever, we are seeing a real desire to invest and to progress. Blueprint Two has undoubtedly been the catalyst.
Companies realise that if they are to become the modern, digital organisations they need to be and Lloyd’s wants them to be, now is the time to get moving – not just to satisfy Lloyd’s within its target-ed timeframes but to maintain their competitive edge, both as individual firms and as a market competing on the global stage.
While the language in Blueprint Two suggested Lloyd’s may commission and build new systems itself to support market-wide transformation, this is looking less likely or necessary as market par-ticipants and service providers are taking it upon themselves to bring the vision to reality.
This is good news as central systems are time-consuming and expensive to put in place, with no guarantees they will be fit for purpose due to the rapid pace of change. By letting the commercial market step in and develop its own solutions, Lloyd’s will save spending millions on potential white elephant projects, and instead benefit from multiple new electronic platforms, new data and API standards and new ways of working, developed by the market itself.
Blueprint Two is likely to evolve to support and guide the initiatives bubbling up rather than attempt-ing to curb or control them. However, Lloyd’s still has a key role to play in ensuring all this innova-tion is channeled in the right direction and in alignment. This will call for ongoing thought leadership and coordination, as well as the selective mandating of certain digitisation steps and processes, such as electronic placement and the adoption of data and workflow standards.
After investing significantly in claims and accounting & settlement processes in the past, the market is now entering a major investment phase in front office systems. With projects incorporating multi-ple product lines or whole portfolios, the costs are high and so are the stakes. However, the market is now seeing tangible benefits of moving data electronically in the form of real-time digital distribu-tion and participants know they must enable themselves or soon fall behind.
Publicly, there is still little to show from the work being done, but there is a great deal going on be-hind the scenes. Not only are individual companies investing meaningfully in their own transfor-mation projects (multi-million-pound sums in some cases), but some are collaborating with each other for the benefit of the market, which is hugely encouraging.
Sequel, for example, is working with standards body ACORD and six leading underwriters, known as the Sequel6, to spearhead the design and adoption of data and API standards that will allow all market participants to digitally transact seamlessly using the same language and workflows.
Data standardisation is essential as the proliferation of individual company portals in the market, each with their own logins and protocols, has become so time-consuming to navigate as to be counterproductive. As the pace of innovation and adoption accelerates, this only deepens the need for a unifying standard for insurance placements, and the Sequel Unifying Risk Transfer Standard (SURTS) will allow any type, class or complexity of business to be moved seamlessly between counterparties.
Sequel’s recent strategic investment in Whitespace, whose digital placing platform is used by thou-sands of market participants, brings further cohesion to the market by creating an end-to-end digital ecosystem of best-of-breed components which seamlessly talk to each other. The result is the digit-isation of the entire specialty insurance process, from quote to settlement.
This ecosystem acts as the backbone into which game-changing AI, machine learning, modelling and analytics solutions can be seamlessly plugged. This will provide underwriters and brokers with deeper insights to help them better understand risk and exposure and a powerful toolkit with which to make better, more informed underwriting decisions.
In the past, these tools may have been difficult to fit into existing workflows. People may have been investing in AI without knowing exactly what they needed and how it would work with the systems they had in place. Similarly, huge investments have been made in big data projects which may have until now failed to find an optimal home. However, what was once theory is now in place, in use, and bringing competitive advantages to users.
Through initiatives like SURTS and others, a new environment is being created that will make digital transacting in London even more efficient and scalable. It is up to the market to take advantage and, from what we are seeing, the will is there. Crucially, this is being backed up not by talk, but by action. That makes this a very exciting time for the London Market.
Author: Ian Summers, CEO, Sequel
Published: Insurance Day 28 April 2021
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