Airmic’s latest survey ‘The Harsh Market: Future of the London Market’,which looks at the London insurance market in a post-pandemic and Brexit context, found the pace of the market hardening is slowing, while the London Market is still faced with challenges around regulation, talent, sustainability and evolving consumer preferences.
According to the findings, insurer and broker satisfaction levels are improving, in line with signs of ‘green shoots’ in the market.
Hoe-Yeong Loke, research manager, Airmic said: “Our latest pulse survey results suggest there are signs of ‘green shoots’ where the pace of the hard market is slowing, which in line with what other recent surveys on the market have been conveying. However, premium rates for cyber have skyrocketed. A tenth of our respondents experienced rate increases of more than 400%.”
Driving Digital Innovation
We set measurable targets at an organisational level and clear objectives and at an individual level as we work to become a truly diverse and inclusive organisation.
The report highlighted insurance companies will lose business to more modern, agile insurance competitors and the London Market’s legacy systems will "doom it to irrelevance". It found a third of survey respondents do not believe the London Market’s current IT infrastructure system is fit-for-purpose, with most citing a lack of collaboration between insurers as the biggest obstacle to this.
Despite the findings there are many insurers investing in their digital capabilities.
Kate Markham Hiscox London Market CEO said: “Hiscox London Market has been investing heavily in digital transformation since 2016 when we first launched our FloodPlus product.
"The FloodPlus platform is a digital trading platform that has grown to providing 17k quotes per week, and is available 24 hours a day seven days a week making trading US private flood business via London seamless and efficient. This platform has now been extended to our US residential and commercial property portfolios.
"Separately, we are investing heavily in harnessing the power of data – both our own data and third party data – to drive our pricing and underwriting algorithms. Digital transformation is a strategic priority of ours therefore and has been for many years."
In the same way, London market insurer Beazley is harnessing digital technologies to ensure it stays ahead of the curve. Kathryn Janofsky, head of underwriting at Beazley Digital said: “Beazley has created Beazley Digital, which rather than simply ‘digitise’ legacy systems or continue traditional service line-led underwriting, is focused on creating a next generation digital insurance placement experience for our broking partners as they look to place and manage small to medium sized risks in an immediate, accessible and personal way.”
According to Locke, this shift towards using digital technologies is here for the long-term. He said: "The Covid-19 pandemic-driven surge in the use of digital technologies by the insurance industry, which adjusted at short notice to remote working, has accelerated the longer-term trend towards digital transformation."
Cultivating a Diverse Workforce
In light of the talent shortage in the insurance industry, more than 60% of survey respondents said insurers and brokers need to do more to resolve this.
Loke said: “The shortage of talent in the insurance industry appears to be resulting in longer wait times for our members to obtain quotes, including for renewals, and to receive documentation.”
Greater investment and understanding of technology among the market’s decision makers are critical to improving the market’s infrastructure.
He added: “Digital transformation therefore needs to double down to keep pace with other challenges such as the chase for the right talent happening in the industry.”
“There are pockets of data management excellence in the industry, but it is a priority generally insofar as more traditional insurers stand to lose business to more modern, agile competitors. Insurers also need to do more to attract the diverse talent, especially from other industries to diversity thought."
Chelsey Sprong, inclusion partner at Beazley explains that the the insurer's workforce needs to reflect the diversity of its customers and communities across the world and that "simply aspiring to have a diverse workforce is not enough".
She said: "We set measurable targets at an organisational level and clear objectives and at an individual level as we work to become a truly diverse and inclusive organisation.
"Through challenging traditional role descriptions and partnering with organisations that can help us reach a broader and more diverse audience, Beazley aims to achieve at least 25% of our workforce being people of colour, with 45% of our senior leadership team being women by the end of 2023.”
Markham said: “We have a comprehensive diversity and inclusion plan that spans everything from our employer brand (how we present ourselves externally, which has been refreshed to represent more accurately the diversity of our employee base) to training within the company to help educate our leaders and managers on creating an inclusive culture where everyone can thrive.
“We also have set targets (not quotas) in terms of recruitment, where for example we target 50/50 short lists for roles in terms of gender diversity. In addition, we are working with a number of charities who support social mobility, providing interview practice, CV support, as well as internships."
The Future of the London Market
The survey revealed nearly half of respondents (44%) believe the insurance market will deteriorate by the end of 2022.
Brexit is threatening the London Market’s influence in the global insurance industry, with 30% of respondents believing that the influence of the UK insurance market since Brexit has waned. It has meant insurers have had to shift decision-making powers back to their headquarters in other countries.
We believe we need to focus on three key pillars to be competitive: great underwriting, continuous innovation and unleashing talent
Further to this, respondents cited a lack of collaboration between insurers as one of the main obstacles to improving the market's infrastructure.
Loke said: “Greater investment and understanding of technology among the market’s decision makers are critical to improving the market’s infrastructure. Greater diversity of thought, along with digitalisation, will be key to alleviating some of inefficiencies in the London Market faced by Airmic members."
It's evident from the findings the London market needs to adapt to secure its global competitiveness and for Hiscox this means focusing on three key areas.
Markham said: “We believe we need to focus on three key pillars to be competitive: great underwriting, continuous innovation and unleashing talent. Great underwriting will always be required to be competitive, but increasingly natural human underwriting can be enhanced and complemented by the power of data and digital, hence our investment in these areas.
"Innovation is required to ensure the products we offer continue to meet customer needs – and in the London Market, these are complex, emerging risks. But the most important of all (as neither one nor two will be possible otherwise) is to attract the best talent, and then to unleash the power of that talent by having a truly inclusive organisation.
