Data: Setting the standard
The future of distribution lies in standards, not systems, says Sequel CEO Ian Summers
There are many positives in Lloyd’s Blueprint Two but one of the most important may be Lloyd’s recognising the need to shift its focus from building systems to standardising data.
While the thinking behind systems like Placing Platform Limited (PPL) and Delegated Data Manager (DDM) is to be applauded, these kinds of central platforms – which require brokers and underwriters to plug into them in order to transact – are unlikely to be needed within five years or perhaps even sooner.
The longer-term goal should be for market participants to seamlessly share data directly with each other in real-time using a consistent set of data and API standards.
Sequel is gifting proprietary IP to the market in pursuit of this goal. We are working closely with ACORD, the industry’s data standards body, and are proud to have assembled the ‘Sequel Six’, a group of market-leading Lloyd’s managing agents committed to working together for the benefit of the market.
Together, our mission is to define and develop data and API standards that will support distribution by allowing data to flow seamlessly back and forth between broker facilities and underwriting product platforms across the marketplace.
At the same time, we are also working on solutions to automate underwriting selection and rating processes where possible. This been done in personal lines for years, but automation is only now finding its way into commercial and specialty lines.
On fairly standard commercial and specialty risks, we know the handful of key data points on which underwriters base their decisions, so there is no reason why this data cannot be run through rating engines and priced automatically, with underwriters putting their expertise to use on more complex risks and referrals. But for this to work reliably, accurately and at speed, everyone needs to be talking the same language.
London is already undergoing a data revolution. Everyone is digitising and the market is finally recognising the importance of getting high quality, timely data into the underwriting process early on to enable underwriters to make decisions based on robust, data-backed assumptions.
Underwriters and brokers increasingly want to work in their own systems and solutions like Sequel Underwriting and Sequel Impact which bring live risk and exposure data, policy information, models and analytics directly to their desktops without the need for manual input.
However, getting trading partners’ information into underwriting and policy administration systems quickly and efficiently is also essential if better underwriting is to be backed up by fast, effective distribution.
One of the least efficient processes in the London market is bordereau, through which underwriters obtain policy exposure data from coverholders. This can be up to 90 or 120 days out of date, making it impossible to trade with confidence.
Under Blueprint Two, bordereau will be gone by 2022, which is a welcome and necessary move – and Sequel’s solutions are already eliminating the need for this outdated spreadsheet-based approach.
Lloyd’s new trading platform for coverholders, Coverholder Workbench, will eventually feed data directly into DDM – the market’s central data capture system for delegated authority premium, risk and claims data – and therefore plays a key role in the transition away from bordereau.
Sequel’s solutions communicate seamlessly with Coverholder Workbench, and Sequel Rulebook already provides a viable alternative to bordereau by allowing risk and exposure data to be shared in real-time.
However, market-wide data standardisation is again essential if London is to put bordereau firmly in the past and reap the benefits of seamless real-time data exchange. Most market participants now have their own APIs allowing them to communicate digitally but this has created a spider’s web of pain across the market; underwriters and brokers have to navigate dozens of separate platforms and logins in order to trade and every API is different.
Without standardisaton, navigating this web of APIs is like trying to put a US plug in a European socket each time.
APIs provide a way of connecting but they are not a standard alone. Rulebook Hub addresses this by allowing users to view and receive quotes from multiple capacity providers in real-time within a central platform using a single login.
However, we recognise the market will eventually need to move past even solutions like this, which is why we are using our proprietary API standards as the foundation on which a new way of communicating will be built.
London has put a lot of effort into improving efficiency in its processes but the standards we design need to make Lloyd’s more accessible to everyone.
Developing bespoke standards for the London market would be quicker and easier but would only put up another barrier to doing business at Lloyd’s – and this is not an option if Lloyd’s is to compete globally.
We must therefore develop an open standard that allows anyone in the world to send risks to London and for the market to capture and translate that data in real-time and write the business rapidly and effectively.
Lloyd’s is moving in the right direction, recognising that standards rather than systems increasingly hold the key.