Verisk: A better way with data is in our grasp
Data and technology have opened the door to game-changing improvements in the way business can and should be written in London. Now the market must walk through it.
For all its recent modernisation, London remains a complex and inefficient environment in which to do business. Whilst this reflects the scope and flexibility that are a core aspect of the market’s value, there is a need to do more, and more efficiently.
Digitalisation and disruption, created in reaction to short-term opportunities, have improved many processes but also created a proliferation of point-to-point solutions supporting counterparties’ digital connections. To navigate this marketplace, participants must maintain a rapidly increasing number of portals and API connections, which is time consuming, expensive and can still require manual logons and rekeying of data. Without coherent data and API standards across the market, this will only get worse.
Thankfully, this growing problem may soon be overcome through data standardisation initiatives like Lloyd’s’ Core Data Record and the work of Sequel6 – a group of market-leading managing agents who have developed a framework for new data and API standards, in collaboration with Verisk and ACORD, which provides the basis for unifying the process aspects of the standards and facilitates a flexible approach to support the necessary data components.
As well as driving greater speed and efficiency, standardisation lays the foundation for elective services such as third-party data feeds, AI and analytics to be integrated into the insurance process, enhancing decision-making at every stage and enabling more processes to be automated. This is essential if London is to remain competitive on the global stage.
This year, we will see the market start to move away from the rigid, burdensome portal approach in favour of data-driven hubs which enable counterparties to communicate, compete, collaborate and cooperate all within one ecosystem. Sequel Hub, for example, orchestrates messaging between brokers and capacity providers, leveraging the standards as they appear and based on underwriting algorithms provided by carriers allow brokers to send in single message and illicit quote responses and a range of options from multiple carriers.
The Sequel6 has developed a standard question set which will enable risks to be automatically rated, quote and bound through Sequel Hub, and has identified several other low-value, high-volume lines for which the same approach can be explored in 2022 and beyond.
By standardising data delivery, harnessing AI and augmenting data along the way, Sequel Hub empowers participants to bring new products to market, automate existing products, write smaller lines more cost effectively and take multiple approaches to underwriting and distribution. Through this solution and other emerging hubs, market participants can simplify their connections across the market and will instead be able to transact with many markets at the touch of a button.
The benefits of real-time, standardised data transfer in combination with automation are wide-ranging and clear for all to see. However, with so much legacy technology in the marketplace, a Big Bang approach in which everything is rebuilt from scratch is neither realistic nor desirable. New ecosystems such as Sequel Hub are flexible enough for multiple solutions to coexist, including legacy systems and systems from multiple vendors. Evolution, not revolution, will help ensure a smooth transition to a new and improved way of doing business.
Achieving real change
Naturally, companies whose systems are geared to take advantage of the new available tools will quickly gain a competitive edge. Yet there remains resistance to change. With short-term pressures, there can be a reluctance to dip into this year’s budget in pursuit of longer-term gains. The industry has also just experienced unprecedented technological upheaval during the pandemic, pushing innovation budgets to their limits. However, for a number of organisations, this has brought the fragility of existing solutions into a sharp focus and increased the urgency and importance of moving to digitalisation.
The stage is set for 2022 to be a landmark year of change in the London Market
There are also structural barriers to change. In London, there has been a long history of ambitious, expensive, consultant-driven change projects that have failed to deliver. Consultants can add value, however, given that practitioners on the ground not only own the outcome of any change, but also have intimate knowledge and experience of existing processes and issues they should have a more central role in driving change. At the same time, real change can only be achieved by getting high-level, organisational agreement on how to connect better as businesses.
Today, decisions on how to connect are still typically made at the desk by brokers and underwriters on a line-by-line, product-by-product basis. Organisations are not leveraging their position and lack of control over these decisions, whilst working for a point solution, can seriously compromise the organisation’s technology architecture, creating long-term flexibility and support issues. This is a key strategic issue for every organisation and executive-level decision-makers need to embrace the bigger picture and understand the long-term benefits connecting in a different and consistent way. This will lower cost and increase flexibility of operation and supporting the ongoing need to implement and maintain new ways of working.
As high-level agreement is reached between organisations, practitioners should then be brought in to ensure change is delivered workably and efficiently. Sequel6 is an example of this approach in action. The group’s founding members recognise at C-suite level the power of collaborating to compete and have empowered their teams to innovate on a number of fronts, including standardising methods of connection and use of standard question sets.
Historical change projects have also fallen by the wayside because the market has tried to innovate by committee, seeking consensus that invariably results in moving only at the pace of the slowest adopter. Initiatives like Sequel Hub are fast-tracked through consent-based innovation, meaning innovation occurs as quickly as is achievable and it is up to participating companies to engage and act or step back and let those acting proceed. This is the principle of “Consent, not Consensus”.
The final piece of the puzzle in achieving market-wide change is critical mass. Even a perfect solution achieves nothing if it has no users. Sequel Hub is already enabling business across 16 lines of business with capacity from 18 carriers, including Sequel6, who have themselves delivered a strong mandate to innovate from both a business and technology perspective and have the resources and influence to make others take notice and follow their lead.
The stage is set for 2022 to be a landmark year of change in the London Market – a year in which early adopters reap the rewards of their investments in technology and pull away from the pack.