London market tech transformation priorities unveiled | Insurance Business New Zealand
In a recent report, PwC shed light on the top technology priorities for London market insurers – and the key drivers behind their efforts.
Perhaps “unsurprisingly”, as PwC said in its Underwriting Transformation Survey 2022 report, lower expense ratios were seen as a very important driver behind tech transformations by 72% of respondents, and important by a further quarter.
Other factors commonly seen as very important to driving technological change included a desire to better leverage MI and data in the business (67%) and sustainable growth and scalability (51%)
Alignment with Blueprint Two, however, was least likely to be seen as very important or important by underwriting business leaders, with 41% ranking it as not important.
Businesses risk putting themselves at a competitive disadvantage if they are not focused on aligning with the market-wide Blueprint Two program, cautioned Chris Croft, CEO of the London & International Insurance Brokers’ Association (LIIBA).
“Central market processing is about everybody doing the same thing, not necessarily the right thing – ideally it will also be the right thing,” the broker association boss told Insurance Business.
“The standardisation is what drives efficiency and collective processes like that – if you have a one-too-many relationship with a broker trying to process premium with multiple carriers on a syndicated risk the key to doing that effectively is standard data messaging and standard processes.”
Blueprint Two is “our best guess” as to what those processes should be, according to Croft.
“If people aren’t investing in them, they risk being an outlier and more difficult to deal with than the rest of the market, and that’s maybe not a great commercial position to be in,” Croft said.
Tools and investment
PwC surveyed senior leaders at London market insurers doing business across Lloyd’s and the London company market, with some respondents also operating in overseas territories and global reinsurance platforms.
Exposure management tools were performing best for participants, with 68% agreeing that they were fit for purpose. Rating tools (48%) and document management systems (43%) rounded out the top three.
More than half of those surveyed disagreed when asked if portfolio management tools (58%) or underwriting workbenches or workflow (54%) were working well for them.
Respondents were most likely to invest in digitising pricing spreadsheets (53%), underwriting workbenches (49%), system integrations to reduce re-keying (49%), market placement platforms (47%) and automating submission intakes (41%) over the next 12 months.
These are “absolutely the right focuses,” according to Sheila Cameron, CEO of the Lloyd’s Market Association and chair of the cross-market data council, which launched in 2021 in a bid to create common data standards for fully electronic trading.
“COVID was a pivotal moment for technology in the London Market, and brought a real awareness that we can deliver both placement and contracts digitally and truly move some of our activity online,” Cameron said.
Broker API links (29%) and algorithmic underwriting rules (29%) were least likely to see investment over the next year, according to the report.
The market should expect broker APIs to feature more prominently “in the coming years”, according to Justin Davies, Xceedance SVP, region head – EMEA, who confirmed that the business is assisting at least one firm with such an initiative.
“They do require a bit more in terms of development and integration, but it is the path forward for our industry,” Davies said.
The biggest risk to businesses’ transformation plans was delivery and execution, with 27% of respondents having flagged this as a concern. Those surveyed also ranked poor underwriter adoption (16%) and unsuitable system implementations or configurations (13%) as top three risks.
Companies can help themselves swerve issues with execution and delivery by finding the right partner, according to Davies.
“Working with a company that has a proven track record of success, technology prowess, and deep insurance domain expertise will help minimise project risk and amplify the value realised through such a transformation initiative,” the Xceedance SVP said.
PWC also recommended planning a “complete and integrated” change programme rather than “disjointed initiatives”, as well as being clear on what is needed from a tool, and not using agile “as an excuse” for undisciplined project management.
“It is easy to make assumptions about the benefits new tools can bring, but without the right processes and adoption, the benefits of the change often fail to materialise,” the report said.