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The London Market has often been accused of being slow to change, but are we doing it a disservice?
According to Ben Huckel, Beazley’s James Wright and Cognizant’s Matt Jarman, the market has the will, but hasn’t found its way just yet.
The panel were speaking at the Insurance Insider London Market Conference last week (22nd November) in a session focused on how Insurtechs are accelerating insurers’ digital transformation plans. Though generally positive about the appetite to transform, the panel agreed that cynicism, and a lack of clarity on goals and proven benefits were hindering progress across the market, as James noted, “the only thing slowing us down is ourselves”.
Across the market, there are clear pockets of accelerated digital change, algorithmic underwriting for instance, and the increasing adoption of APIs and data portals by SME insurers, but the larger, more complex relationship-based products are lagging behind. Ben agreed that it’s a mixed bag; “we’re seeing new entrants fully invested in taking a digital approach, and existing businesses who want to start their digital journey, but it’s not as simple as flicking a switch”, he emphasised that it’s a transformational change that includes not just technology, but willingness and the buy-in of the entire business.
Commencing transformation projects without a clearly defined end goal was seen by Matt as one of the biggest problems with innovation. According to a recent Cognizant survey, nearly 100% of the market is either about to commence change, or in process of it, yet 92% of these can’t define the benefits of that change – it’s little wonder then that such projects are limited, and confidence in the outcomes is reduced. Matt continued, warning of the dangers of digitising processes that haven’t been refined or reviewed, effectively constraining organisations within systems that aren’t fit for purpose, he suggested that it’s much better to focus on the processes that are appropriate and will deliver greater value and more impact.
Collaborating for success
Collaboration was seen as a key driver for success across the panel, both within the organisation and externally with vendors.
Within an organisation, Matt believes it’s rare that any one person or team understands the full end-to-end customer journey and therefore, the impact of successive change programmes, he suggested that businesses must change their mindset “bringing the clients’ interests back into the conversation”. Transformation within siloes rarely works. For this reason, James agreed it’s important that change is driven, not just by the technology department, but with stakeholders from across the business who can join the dots and take a holistic approach to transformation. At Beazley for example, underwriting, operations and tech have been brought together into a single team to agree on what areas they need to focus on to win more business, particularly in a hard market. This business-wide approach means that transformation, and the pathway to innovation is embedded within the fabric of the team, with individuals all having agreed on the way forward and had these goals aligned with their own objectives.
Vendors have an important role to play here, Ben emphasised that good InsurTechs shouldn’t seek to apply their solution to all businesses, instead they should go in and spend time learning about the business and its unique challenges, working together to understand the best solution. Domain knowledge is crucial here, he suggested that those organisations that “survive and thrive” will be those that combine a mixture of technology know-how and expertise and knowledge of the London Market. Those businesses will be more successful at working within the market to develop solutions that meet current challenges.
This point was emphasised by Ben later on in the discussion, “getting to the pain points means working closely with teams to understand their requirements” but this can be tricky. James admitted that underwriters often struggle to articulate the problem they need to solve. Though experts in their field, they’re not the technology experts, equally, vendors aren’t necessarily underwriting experts, so there needs to be close collaboration between the two to understand the problem underwriters are facing and develop a solution that will benefit them.
Another challenge facing the market is the length of time it can take to see the benefits of change programmes. Some can take upwards of 18 months to implement, in a market that must respond and adapt quickly to change, this is too slow. Lengthy project timelines can lead to fragmentation across the market. Whereas there is a massive potential to accelerate change, businesses can’t afford to wait 2-3 years in a market that evolves as rapidly as ours does. In this setting, many see no choice but to “take the bull by the horns and forge their own path” says Ben, this exacerbates the problem of many different businesses working on many different systems that don’t necessarily talk to each other.
Though larger change programmes will take longer to implement, in the meantime, Ben argues that there are some obvious areas that we can start to automate, for example, re-keying and that “swivel chair” action from underwriters moving between multiple systems. We can remove a lot of frictional cost from the underwriting process, not to mention an estimated 80% saving on time and efficiency with these smaller change processes, delivering immediate benefits to underwriters and proving the benefits of change.
As the panel wrapped up, it was clear that there’s still much to do to accelerate change in the market, but that it must be a joint effort. The technology solutions are out there, but we must work together across the market to make sure change is appropriate, relevant and driving clear business benefits.