Before COVID-19, the London insurance market was at a tipping point of transformation driven by the Blueprint initiatives from Lloyd’s. A digitally enabled future with data as the ‘spine’ was laid out in Blueprint Two with a vision towards modernizing the London market. COVID-19 proved that London market brokers and insurers can embrace digital to transform their organizations and operating models. However, the fact that the market managed to deliver its core offerings remotely throughout the pandemic should not be mistaken for the success of centrally driven market reform.
The winners in the new normal will be the companies that can successfully re-imagine their operations and business models to align with a digital future. Retail insurance has already seen a shift from policy-centric to customer-centric operating models. A similar shift is starting to happen in the London market as the focus moves to customer outcomes rather than internal or broker to carrier processes.
So, what are the obstacles standing in the way, and how are organizations going about tackling them? In this blog, I would like to discuss the first obstacle — data.
A fully digitized market hinges on how insurers truly harness the power of data. For too long, the London market has poorly captured and under-utilized data across all functions, especially in claims where swathes of insights have been left buried in transactional data. Furthermore, in many organizations, disparate datasets in different formats on multiple legacy systems have often stifled attempts to apply new analytical capabilities.
There is plenty of data, but what is needed is good, clean data than can be shared across the organization (and across the market). In the absence of a robust data strategy, this is not possible. Enhanced computing power, sophisticated analytics, Robotic Process Automation (RPA) and Artificial Intelligence (AI) will be crucial to unlocking new opportunities to streamline operations, improve underwriting ratios and enhance customer experience.
In this context, the focus in Blueprint Two on consolidating data into one single reference point as a part of a ‘digital spine’ is encouraging for the future of the market. Lloyd’s moving to a ‘data first’ method of operating, as opposed to a document-centric approach, via the creation of ‘Core Data Records’ is certainly a step in the right direction. This should enable Lloyd’s to introduce a truly digital marketplace which can ultimately remove the laborious manual data extraction and validation process associated with placement, along with duplication of efforts and errors that are typical.
Companies will have to align their approach to underwriting to embrace this ‘data first’ way of working. As process standards are introduced, they will be required to re-design how underwriting teams operate to take advantage of this more efficient way of working.
There are three key areas to focus on with data — data ownership, data standards and data quality — and Blueprint Two seeks to address all three. There are significant challenges around all of them, particularly in a market with a large number of stakeholders and a complex value chain. The market has to move on from questions over who owns the data or has access to it, and focus on creating competitive advantage and find new ways to deliver value to the customer.
For example, an insurance company could invite a customer to share their data so that the company can process their policy more quickly, efficiently and cost-effectively. But the organization can also use the data to build loyalty and engagement with the customer by offering them services that are tailored to their needs.
In many ways the pandemic has underscored the value of the central vision of Blueprint Two — a digital marketplace driven by data. But it has also opened the eyes of naysayers to the ‘art of the possible’.
In my next blog, I will discuss the challenges around legacy technology and culture.
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