Recently, I attended an Intelligent Insurer magazine roundtable on the weighty topic of technology revolutionising the London Market. Coming from an insurance technology background, this is a subject close to my heart and that of my company, Xchanging, a CSC Company.
As one of my roundtable panel colleagues and I recalled, the London Market history books are littered with failed technology initiatives (remember EPS and Kinnect?). In fact, we both recalled a meeting to discuss electronic placing over 25 years ago!
So technology revolutionising the London Market is not exactly a new concept, but it was interesting to hear why attendees thought a new revolution would be more successful than previous attempts. Now may finally be the time for London luddites to adopt changes rather than ignore them once again.
One impetus for that is the critically acclaimed London Market Group (LMG) paper “London Matters,” published in December 2014. The paper noted that London’s competitive position could be impacted by “technology shortening the supply chain and challenging an antiquated insurance infrastructure.” The panel agreed that the London Market was way behind the curve in technology adoption, and that the LMG report was the catalyst for change that was needed.
We equally agreed that London needs to be more efficient and easier to do business with if we are to retain market share and attract new business, especially in the light of the digital disruptors actively and successfully entering the global marketplace.
Today, we see the first steps of the technology revolution being taken, including with electronic submissions processed as part of the Central Services Refresh Programme (CSRP). The London Market Target Operating Model (TOM), CSRP and Premium Payments Ltd (PPL) projects are definitely steps in the right direction, but the panel agreed there’s a long way to go.
In many industries, innovation through technology can provide a real first-mover advantage for anyone with the vision and courage to take the plunge. Look at Airbnb — from zero to $25Bn in eight years. Or Nintendo with their new augmented reality technology used in Pokémon Go, adding $20Bn to their stock value in under a month. (If you haven’t seen Pokémon Go ask anyone under 20 to show you; they’ll almost certainly have it on their phones!)
We know the same revolutionary advantage is being seen in the insurance sector with companies like Cuvva, Lemonade and Friendsurance — so why is London so slow on the uptake?
Perhaps, as the panel suggested, the delay is symptomatic of a collective subscription marketplace in which no one member wants to go first and considers that if things are generally “OK” there’s no real incentive to push for change. However, if market share started to decline or if it got to the stage where brokers no longer saw an advantage in bringing business into the London market at all, this would change.
Well that all sounds a bit gloomy, but we in London should not forget why this is such a strong market — and why London is still regarded globally as the gold standard for complex Commercial P&C and Specialty (re)insurance business. The London Market ecosystem has always encouraged innovation, specialisation and expertise and provides its 200 or so broking firm’s access to over 150 carriers in the square mile, which is totally unique.
The trick is going to be in perpetuating that strength as technology advances break down the access barriers for competition and water down the marketplace advantage. The TOM has definitely started that with initiatives like electronic placing promoting straight through processing, but technology should be put to better use.
As the conversation came to a close, panelists seemed to be in agreement that technology will absolutely revolutionise the global commercial insurance market and that the London Market needs to progress. Preferably, the market will accelerate the current initiatives now to avoid missing the boat.
John Racher, Product Strategy Director at Xuber, joined the insurance software business in 1999, bringing with him over 12 years’ market experience with a Lloyd’s Syndicate, latterly managing the run off of a number of Syndicates. Connect with him on Twitter.