Big Question November 2019: Which of Lloyd’s three initiatives is the most urgent to implement – underwriting, culture or technology? And why?
Earlier this month brokers and insurers were told by the Prudential Regulatory Authority’s (PRA) acting director of insurance supervision Gareth Truran in a letter that they must create an internal culture in which staff feel safe to report wrongdoing. Culture is just one of the three initiatives that Lloyd’s said they were going to implement, but which is the most important? Insurance Times finds out
Nikolaus Sühr chief executive and founder, Kasko
“As much as they are separate target entities, I don’t believe you can fix those things in isolation; these need to be approached holistically.
“Focus on improving underwriting performance (process, automation, pricing accuracy), because flexible underwriting is Lloyd’s unique selling point. The key challenge they should fix is making it easier to place business with Lloyd’s, not having to go through layers of Lloyd’s coverholders or brokers to access the good stuff, the underwriting capacity of the Lloyd’s Syndicates.
“You then inject technology to make it easier to place business, underwrite the risk, focus on realtime, data-enriched underwriting models and roll that out on a use-case basis to make sure the tech actually delivers value.
“This in turn will drive a change in culture as people start doing things differently. A key point about culture that companies keep getting wrong; it’s not about ping pong or sleep pods – it’s the sum of the decisions that a company has taken over time, especially when rewarding, penalising or ignoring certain types of behaviour. You cannot ‘fix’ culture to make us use technology better. The only way to change culture is to start changing behaviour and subsequently, as the aggregate of behaviour changes, culture changes.”
Ryan Jones, head of innovation, BMS
“The Future at Lloyd’s initiative is focused on continuing the unique story that is the hub of insurance. Among the multiple threads of improving underwriting, updating technology and transforming culture, the last stands out as an area where urgency may prove most beneficial. To build the rest of the Future at Lloyd’s, a foundation which is safe and inclusive is absolutely necessary.
“It isn’t enough to just keep a clean image or reactively protect the brand. We must be proactive in our transparency and aggressive in our efforts to uphold this new standard. Assuming we do that, the future becomes even brighter. Assuming we build this foundation, only then can we expect to attract and retain top talent, not only within underwriting and broking, but in technology and operations as well.
“Assuming diversity becomes a part of the Lloyd’s DNA, we may find that as a market we begin to innovate and lead in ways not yet explored. There is no question that there are plenty of opportunities and threads to follow – best we start rather than end through culture.”
Dominic Kirby managing director, ArgoGlobal
“The Future at Lloyd’s blueprint is an ambitious and transformative project. The technological drive that will change the way the marketplace functions is by far the most important part of Lloyd’s vision, in my opinion. For all the proposed initiatives, the connectivity of the market needs to improve dramatically to enable the large-scale and high-quality data flows required. The risk exchange, complex risk platform, next-generation claims service and lead-follow proposals are all reliant on upscaling the capabilities of the Lloyd’s market and of its participants.
“Technologically, Lloyd’s planned efforts are highly aspirational, but we are fully behind the ambition for the centuries-old institution to evolve into what it needs to be to succeed: an ultra-modern tech business and digital platform that will be the gold standard for (re)insurance trading well into the future.
“The envisaged tech revolution will enable both an underwriting transformation and cultural realignment as top talent, attracted by the best-in-class facilities, enter the market. This new intake will enrich Lloyd’s, broaden participants’ horizons and change the way we do business for the better, without losing sight of the necessity to maintain traditional underwriting skills.”
Janthana Kaenprakhamroy, chief executive, Tapoly
“All three areas require disruption in terms of improvement and there is a high correlation between the level of innovation and technology adoption rate. Unfortunately, this is often opposed by people who act as a barrier to change. Hence culture and technology enablement has to come hand in hand. Having said that, as an insurtech and coverholder at Lloyd’s, it is certainly great to see the efforts made to date to improve things and embrace innovation.
“I believe once technology is introduced it will automatically lead to a better underwriting process, which will be more data-driven as opposed to relying on the experience of individual underwriters. Even experts can have gaps in their knowledge and may not always have an in-depth understanding of customer behaviour or their risk profiles. Hence if you look at the current pricing models and underwriting processes, they are often based on high-level hypotheses and assumptions, especially since insurers are often quite remote from their distribution channels.”
Nick Haldane, UK sales director, Novidea
“All three are important for the industry’s future, but technology is by far the most pressing because it can improve a company’s performance by underpinning and enhancing all elements of the business, including culture and underwriting. For example, the Lloyd’s broker is undoubtedly a trusted source of advice with irreplaceable experience and valuable interpersonal skills, but it’s now virtually impossible for them to keep adding value without the adoption of technology. It can help them offer more tailored advice to each customer, which is increasingly necessary
“We live in an ‘on-demand’ world and the use of a device-agnostic technology platform, for example, means that a great customer experience can be delivered from any location at any time. It allows brokers to provide an update to a customer almost instantly – a huge advantage when personalised customer service is of such vital importance. Continued reliance on legacy systems no longer cuts it – only the adoption of the latest technology will enable brokers to stay on the front foot when delivering their excellent service to the customer.”