Unity of consensus over the need to digitalise the Lloyd’s market has finally arrived. We have left ‘will we or won’t we’ behind, and abandoned the noise that has often been permitted to delay the journey. Today our conversations about digitisation focus on the best routes forward. It’s the first step in tangible progress towards essential, enduring change that will benefit our businesses and customers.
Digitisation won’t suddenly be ‘finished’. It is a long-term process that demands commitment. In 2019 we will build on the foundations of PPL, DA SATS, and structured data to capitalise on our investments so far. To enable further successes, we must continue our drive towards sustained underwriting discipline. Only disciplined underwriting will yield the funds we need to fuel innovation both in products and technology. Together they will ensure Lloyd’s continued relevance in the international insurance market.
Before we are able to make significant further progress, we need to better understand where costs are too high, whether related to regulation, acquisition, inefficiencies, or others areas. A detailed analyses will uncover their specific composition.
Data entry is one: when ten carriers share the same risk, each is likely to re-enter the relevant data manually into multiple systems, creating a massive duplication of effort. Re-entry also adds secondary costs that arise from errors inevitably introduced. Those costs have not been quantified. A concerted investigation is a logical first towards identifying specific component costs which deserve our attention and investment. Each incremental step will move us closer to the goal of a market digitised from end to end.
Much of this effort is inward-looking, so we need to be constantly conscious of our customer by also taking an ‘outside-in’ view. For example, we need to break down the claims process to learn how we can reduce internal costs, but we must do so while we improve outcomes for insureds. To uncover the sticking points, we have to consider the entire process, from the moment a claim is submitted until payment reaches the customer. When we work together to develop and deploy technology that will improve the claims process at multiple points, we will reduce our own costs at the same time.
We should harness our new unity of consensus to work with Lloyd’s to define a wider strategy for the market. Recent leadership changes within the market’s central institutions have brought new people with fresh perspectives. That has created a significant opportunity to refocus our approach. Already we have seen Lloyd’s change the way it oversees the business managing agents underwrite. The effort quickly improved our market’s overall health.
We can do much more. We should exploit technology as far as possible for the standard risks we write, allowing us to focus more of our resources on high-value-added underwriting of the more complex, new and evolving risks. We need to embrace alternative capital and exploit new UK legislation that enables ILS, supported by differentiated lead/follow structures. We should enhance our distribution by creating powerful consortia that enable carriers to work together to respond to customer needs.
To move towards these goals will require a year of renewed change, which is essential to maintain our relevance to insurance buyers. It is our only sustainable way forward. It will require investment, which demands discipline and improved efficiency. 2019 will be the year that Lloyd’s new unity of consensus makes it happen.
Published: 25 February 2019