Tech investment is soaring in London as the digital revolution gathers pace, writes Sequel’s Ian Summers
This is an exciting time for London in its ongoing modernisation drive, as a wave of digitisation activity sweeps across the specialty market in response to Lloyd’s’ Blueprint Two roadmap.
There may still be little to show publicly from the work being undertaken, but we are seeing widespread investment in technology and real change being instigated behind the scenes.
Lloyd’s is committed to becoming a purely digital insurance market in which consistent, high quality data is transferred seamlessly between participants in real time - and the market is now buying into that vision.
Blueprint Two, which was released in November 2020, explained how Lloyd’s expects business to be done in the near future and, crucially, how to get there. This has brought clarity to the market and galvanised market participants to be much more proactive in seeking out new digital solutions for both back- and front-end processes.
London was, of course, already in the midst of an ongoing digital revolution and has made considerable progress in the last few years – most notably in the digitisation of back-end processes such as claims settlement.
Now, projects are bubbling up across the market that are designed to bring all areas of the specialty insurance value chain into the 21st century, including front-end placement and distribution.
Market players recognise digitisation as a competitive necessity, both as individual companies and for the market as a whole, and Lloyd’s must take credit for accelerating this cultural shift with Blueprint Two.
Market players recognise digitisation as a competitive necessity, both as individual companies and for the market as a whole
We are now seeing very significant sums being invested into digital transformation projects – so much so that we would classify the market as entering a new investment phase when it comes to front-end processes and systems.
One risk this brings is that there will be a further proliferation of APIs in an already overcrowded marketplace of portals, which we refer to as London’s ‘portal war’. With numerous brokers and underwriters each setting up their own portals to transact digitally, this has created a spider’s web of logins and APIs, many of which do not integrate seamlessly.
This is making it increasingly time consuming and inefficient to transact digitally in the market – a problem that will only worsen as the pace of innovation accelerates.
This is one of the reasons why Sequel has been working in collaboration with the insurance standards organisation ACORD and leading underwriters to develop a new unifying data standard which will allow market participants to transact using standard language and workflows.
The Sequel Unifying Risk Transfer Standard (SURTS) is a widely applicable standard process for ‘offer and acceptance’ of risk which separates the process elements of a communication from insurance information contained within, allowing any type, class or complexity of business to be moved seamlessly between counterparties without the need to integrate APIs.
Our aim is for SURTS to be in use and bringing benefits to the market before the end of 2021.
Sequel has also recently made a strategic investment in Whitespace, which creates an end-to-end ecosystem for speciality insurance by integrating Sequel’s suite of best-in-class software solutions with Whitespace’s digital distribution platform, which is already in widespread use across the London market.
Initiatives like these will make transacting digitally with and within the London market simpler, more efficient and more scalable, and bring improved speed, cost and efficiency to all involved.
It also lays the foundations for next generation AI, automation and data analytics to be seamlessly integrated, helping market practitioners make more informed decisions and select the right business at the right price, making London more even competitive.
Historically, Lloyd’s has invested heavily in central systems in a bid to move the market away from old manual processes to purely digital transacting. Blueprint Two brings the manual era to a formal close and marks the beginning of London’s new digital era, mandating that all business be conducted digitally and that outdated processes such as spreadsheet-based bordereau are gone from the market by the end of 2022.
While Blueprint Two hinted that more central market system development may be on its way, the flurry of innovation going on in the market in the last six months suggests that, going forward, large, expensive central systems may not be necessary. The market appears to have taken the message from Blueprint Two and taken it upon itself to realise the vision.
We believe Lloyd’s will be encouraged by the proactive work being done behind the scenes in London at the moment and will allow the commercial market to find its own path with Blueprint Two providing the guiding principles.
Lloyd’s will of course still have a crucial role to play in communicating its vision and overseeing the innovation to ensure the market progresses in the right way and with all parties working in alignment. However, it is hugely encouraging to see market participants proactively making the necessary changes to their own systems and processes rather than waiting for instruction.
The combination of rising investment in modernisation among insurers and brokers with ongoing innovation from solution providers and a growing spirit of collaboration between stakeholders in the London market suggests there is real momentum in the market right now – and makes us optimistic that 2021 could be a pivotal year in London’s modernisation.