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Sep 24, 2020

Data Integration – The Key to True Successful Innovation in the London Market

by Chris Newman, Managing Director – Global, ACORD
as seen in Insurance Day

The Covid-19 lockdown was a shock to the system for the London Insurance Market. Seemingly overnight, the busy Leadenhall Market went quiet and the doors of Lloyd’s were closed for business and silenced… but not completely. By adapting through technology, people were able to carry on with business from their homes—and they did so very successfully.

One might naturally think of video conferencing as the star technology for the insurance industry during the pandemic quarantine, and yes, our Teams, Zoom and Webex accounts all got a good workout. But there was much more going on that wasn’t as visible, and that was what was moving through the pipes of the insurance industry. The movement of data has represented the most important way that technology has been leveraged during this period.

Covid-19 has given us a new vernacular with PPE, but those of us in the insurance industry have also started to hear more and more about PPL and other placement technology platforms. These platforms were here long before the pandemic, certainly, but they rapidly became much more relevant due to the lockdown. Placing platforms have surged, as evidenced by renewal figures that have doubled in usage in comparison to the same time last year.

We were forced into a cultural shift by going into lockdown and having to work remotely, and although that presented immediate challenges, it also presented immense opportunity. As an industry, we’ve long wanted to move from documents to digital, but we’ve struggled to make the leap. Now it is happening, as market participants make more use of existing tools and new entrants rapidly gain traction with electronic placement platforms.

Placing platforms stood up well to being road tested, but we’ve also seen bumps in that road. Some deficiencies in end-to-end platforms were highlighted, illustrating that the whole ecosystem is still a long way from peak interoperability. And perhaps there has also been a lack of readiness to take advantage of the increased usage. These will be among the next challenges we must overcome, along with an immediate need for standardised data integration.

The value of a standardised data model

Innovation is not of much use without being able to work with a framework of consistent language. The digitisation of data for large commercial risks has long been an issue, due to the vast array of systems and interfaces that have accrued over time across the market. This is something our industry must commit to resolving now. At the end of the day, carriers have to integrate with several platforms, from newer entrants and leading brokers. This plethora of placement platforms are all obviously trying to offer differentiation and competitive benefits, and that’s as it should be to offer access and efficiency. However, the data must be in a consistent platform for carriers to successfully adopt these systems.

The UK general insurance market is leading the world in automation for smaller commoditised  risks, but now it’s time to significantly streamline—and automate, where possible—the larger risks. This is a huge shift, as complex risks have traded on a manual basis for a long time (it was really not so long ago that business was conducted with suitcases full of paper and deals on napkins!). The need for digitisation and standardisation as we take this step is abundantly clear.

Our industry now has lovely user interfaces, and APIs, and those are certainly exciting things, but this is just the beginning. The reality is that even Meerkats and Opera singers in the UK General Insurance market space still have data standards at the heart of the end-to-end transactions; they are just not so visible to the end consumer. We now need to move toward thinking about how we all look at the digital data. We need to leverage integrated data standards for specified payloads to perform a business function, not just forms and pdfs.  

We’ve seen progress, to be sure. Insurance is all about data, and the placement of risk is only one piece to this puzzle. The Ruschlikon Initiative, a group of global reinsurance leaders who work to advance back office processes, have achieved success in increasing the efficiency of data exchange, accelerating cash flows, and resolving a tedious accounting issue—unallocated cash. These are expensive and challenging problems to tackle, especially as these reinsurers receive accounting data from multiple sources including manual paper, electronic (emails, peer-to-peer), direct connectivity to different platforms (APIs), etc. Building on its successes in standardised electronic transactions, Ruschlikon has worked with ADEPT (the ACORD Data Exchange Platform & Translator) to develop a standardised, streamlined way to process unstructured accounting and reconciliation data. Now they are translating that success to the placing side, which delivers a true global blueprint for processing.

It is exciting to envision all of the moving parts in a standardised data format, where the full insurance cycle processes—from the quoting and placing to back office and claims—are automated, and where we have integrated and consistent data for a simpler and easier workflow. This will ultimately save money, save time, and better serve insureds.

Embracing digitisation is vital to the success of our industry. The recently released 4th edition of the annual ACORD Insurance Digital Maturity Study found that companies embracing digitisation to develop new, technology-enabled operating models throughout the enterprise significantly outperformed the industry, and saw a direct correlation between digital maturity and total shareholder return. Yet, more than half of the global insurers in the study are still only at the stage of exploring how digitisation can be applied against their business model.

Covid-19 may have forced our hand a bit, but the London market is well on its way now as a result of the cultural shift of the past 6 months. Strong, consistent data standards will carry us through the next stage of digital integration.