Companies must not only enhance their ability to collect, cleanse and analyse data but also to construct the knowledge frameworks that enable profitable underwriting.

As delegated authority business continues to grow both in volume and importance for Lloyd’s and the London company market, there is now a growing awareness that data holds the key for future success.

The industry’s use of data has often been defined by the dis­connect (all too prevalent) between the available data and the ability for insurers to access what they need to know about the risks they assume. For the London market, delegated authority agreements have allowed underwriters to access business across the globe. However, far too often there are complaints about the speed and quality of the data transferred between the counterparties.

This is hardly surprising, given insurance companies are now in effect data companies. They do not provide a physical product. Their raw material is the data they collect on the risks they under­write and price. As a result, we are seeing growing interest in the way in which data can be better accessed and understood.

There is also little doubt that Lloyd’s Blueprint will have a fundamental impact on how the market is asked to distribute and use the data it obtains. It will drive operational efficiencies across the market even though 99% of data still comes via spreadsheets. But the Blueprint needs to drive delegated authority platforms and processes that will go above and beyond the use of traditional methods. The platform needs to grab the data from various sources, manage it and enable better decision-making. 

The Blueprint is already increasing pressure on the market to use application programming interfaces, which allow underwriters to access data direct from the coverholder. The market needs to have a platform that allows all parties to the process – the broker, third-party administrator, coverholder and capacity providers – to access the data in real time.

Following market

In many instances the following market, despite being on risk, does not see the data. It not only needs to see the data but also needs to be able to adapt it so it can be understood and managed by followers as well as the lead carrier. If the leader puts data on the system, all those that participate on the contract should be able to access it. Whether the delegated authority agreement contains solely Lloyd’s or company market underwriters or a mixture of both should also not be a barrier to the movement of and access to that data.

There is a growing realisation if a firm can improve the way it understands and uses data it can also open up the ability for wider and systematic operational change and efficiencies. In the present climate firms should be asking themselves three questions. What should we not be doing? What should we continue to do? What should we be doing that makes our performance better? 

If a company wants to drive better use of data and with it the benefits and efficiencies it can deliver, these are the questions they need to answer.

There are huge opportunities and capabilities to truly understand the data companies possess and the value it can bring to the business. Data is key to the ability to control risk and understand performance.

What is clear in the future is the requirement for all parts of the chain to be able to prove they understand the risks and have control of the data that led them to the conclusions they have made.

Coverholders will need to prove they understand and are able to manage the risks if they are to convince their capacity providers they merit ongoing support. For the capacity providers, if they are in Lloyd’s, being able to evidence that understanding will go a long way should they wish to extend the scheme and increase the capacity. The primary market will also need to reassure their re­insurance partners they understand the business when it comes to their treaty placement.

We are seeing an uptick in companies wanting to leverage the data but hamstrung by resources. They need to look at the functions they need to outsource and seek vendors that can meet their needs and deliver the necessary support to open up the benefits that data will deliver.

Policy lifecycle

At Charles Taylor InsureTech we continue to work with our clients to build out our Tide platform. Companies are looking to open the whole policy lifecycle and the data around it. They are more interested in integrated solutions, rather than standalone products. We are continually asked to identify the elements that can impact the business and support business change. It is also not about reducing numbers but about redeploying experienced staff within the process. The complexity of the business that is written in London requires companies to use the experience and skills of the staff and with it enable them to become more productive as a business.

Underpinning all of this will be the ability to access the right data, manage it and make better decisions to turn it into value. That includes being able to understand where it is in the overall process, who needs it and who uses it. London and delegated authority business are undergoing change and the market will require a collaborative approach from all participants if it is to deliver the opportunities that will present themselves in the months and years to come.

Success will be dependent on being able to move from data mining, aggregation and cleansing to analysing, understanding and building the knowledge base that can be used to drive value for their businesses in the form of both top- and bottom-line growth. Doing this will require closer engagement and alignment with their technology providers and vendors to ensure all the building blocks are in place and the system can efficiently move the data to where it is most needed. 

Author: Olly Venables
Published in Insurance Day 2 December 2020