What is the ‘new normal’?
Digitisation will not be a threat to the market, it will be an enabler in the ‘new normal’, says Morning Data’s Paul Buckle.
Lloyd’s reopened its underwriting floor at the beginning of this month, marking a restart of the ability for underwriters and brokers to meet face-to-face for the first time since March. Initially, Lloyd’s will limit capacity to a maximum of 45 percent, as the market seeks to inch its way towards normality, or should we say a ‘new normal’.
“What is the ‘new normal’?”, I hear you ask. Well, it is just like the old normal but different!
The truth is no-one really knows exactly what it will look like right now, but we can all agree it will include an increased use of video conferencing, other forms of digital communications and digital transactions.
Of course, the market was already moving in this direction and the Future at Lloyd’s blueprint outlines several initiatives to support the digitisation of this market. The forced absence of face-to-face capability has prompted the creation of the Virtual Underwriting Room for Lloyd’s, and since the Covid lockdown, there has been a marked increase in digital placements via PPL and Whitespace. In fact, record breaking placements have been made, with PPL announcing in July that the second quarter saw an all-time high, with 8031 risks bound in the week commencing the 29 June.
Is this the end of face-to-face in our market? I certainly do not think so, but the Covid lockdown has seen a successful test of the market’s resilience and the market’s ability to adopt a more digital way of working. With Lloyd’s capacity limit in place, and many of our own clients also looking at limited capacity in the short term, there will be a continued reliance on the use of digital tools throughout the complete value chain of an insurance transaction. The face-to-face element, however, is a key differentiator for the London Market and it will remain essential to the continued success of the market.
Common data standards
The technology itself has never really been the challenge. The real challenge is cultural in part, but mainly the absence of a common data model and set of definitions act as a blocker to free up movement and exchange of data.
Using multiple systems/portals to exchange information around the market, or even within your own business, is not the way forward. It is inefficient and provides too much risk for error. In a recent survey of Morning Data users, 80 percent of respondents said that market integration was an important objective.
These systems need to be able to talk to each other, so that data can flow through the market, ideally without human intervention, but certainly with minimal human touch points. For this to be successful, we need to think data centric not document centric. We need to think of documents as just a way of presenting the data, another form of user interface. The key to data centricity must be data standards that the market adheres to; this will mean we can all talk the same language.
APIs will provide the ability to pass data from one system to another, but that is not the only way to derive data. There are a plethora of tools out there today that can derive data from images and Word documents, for example. Whilst some of those tools are in use in the market, a common data model and standards are still needed. The market is indeed working towards providing a suite of APIs and to support this they are working on the data standards needed. Morning Data is currently working with LIMOSS and others, as the data lead, to agree a set of data standards the market can work with.
Morning Data was asked, and accepted the task, of helping to define a common, class agnostic, data model across all types of insurance, to assist the whole market being able to send and receive contract, claims and transactional data. It’s important for everyone to realise that digitisation will not be a threat to the market. It will support the market USP, supporting face-toface, encouraging more innovation, providing better data understanding, and ultimately providing customers better products and services.