An acceleration towards digital
In this episode, our Liberty Create Product Marketing Manager, Yad Jaura is joined by industry expert Paul Rich from Motosi Consulting. They put a spotlight on the London Insurance Market, chatting about the move from face-to-face to digital, a move which has been accelerated by COVID-19.
Listen in to learn more about how the London Market is trying to reduce the high acquisition costs of placing business and simplify their complex processes through initiatives such as the Future at Lloyd’s.
Yad: Hello and welcome to this life in Low-code podcast. I’m Yad Juara a Product Marketing Manager at Netcall and your host for today’s episode. Today we’re focusing on the London insurance market and joining us for this discussion is Paul Rich from Matosi Consulting. Paul has worked int he London market for many years so is here to share his views on it’s challenges and needs. Welcome to the podcast Paul.
Paul: Hi Yad. Thanks for having me, it’s really great to be here.
Yad: So, Paul can you start by giving us a quick introduction to yourself and the London Market?
Paul: Yeah sure. My career started many moons ago, after leaving the Royal Marines I kind of found myself falling into insurance, like many people perhaps do. I’m not sure many people actively chose a career in insurance, but here I am some 20 years later, still having a career in insurance. My first job was actually with a high street broker, where I worked for a couple of years and I found I had a bit of a taste for insurance, I passed a few of the exams that were around at the time and I moved on to a Lloyd’s Broker. At Lloyd’s i got what was called “the ticket”, which was effectively my Lloyd’s entrance pass if you like, allowing me to actually broker business in the Lloyd’s market. So I would have been one of those people who would have sat on a bench, at a box, presenting insurance risks to underwriters, to take their participation in those particular insurance risks.
I guess after that, I’ve seen a steady progression though various roles, across the market, in both the broking area and the insurance carrier side, predominantly working in the Lloyd’s and the London Market over those years. That took me to a point about two years ago where I set out on my own, starting Matosi Consulting and the reason I did that was really to service what I thought was a growing need for some bespoke consulting services to companies in and around the London Market. And that’s the basis on which Matosi was created.
Yad: You’ve spent much of your career then in the London Market, and it’s a complex and unique market to be part of, so what is it about the London Marketing that has kept you engaged for so long, how come nothing else has ever tempted you away?
Paul: It is certainly complex, absolutely. Perhaps one of the most complex business models to execute on. I think that complexity is something that has presented challenge, and I’ve always been one to rise to challenges. But, I think one of the things that’s probably kept me in the London Market is the sense of belonging. There’s a very strong relationship based ethos that’s in the London Market – a lot of it was done over many years in a face-to-face environment. Now obviously the situation around COVID has meant this particular practice is somewhat restricted, but yes, it’s certainly very, very complex and when you think of all of the different parts of the distribution chain, with respect to insurance distribution, capacity distribution, you’ve got many, many brokers, you’ve got all manner of different insurance carriers. So that inter-connectivity is probably one of the reasons why there’s this complexity, but unfortunately that the London Market has become hampered by, and is suffering at the moment with the complexity of the processes that have traditionally supported the London Market.
Yad: It’s interesting that you say that relationships are really important, because we’ve seen that in many industries they’ve had a real push towards digital working, especially in the current climate as we’re coming out of the global pandemic, and that’s forced many office based staff to work from home full-time And given that the London Market is known for it’s trading practices and it’s relationship based working, heavily based on face-to-face interactions, how well do you think that the London Market is adapting to these changes and the need to move to digital?
Paul: Generally, I think the businesses have probably surprised themselves at how well they’ve actually coped during lockdown. I think that there were probably two or three phases to the adoption of the remote working practices, which are now pretty much the norm. I think initially there was a knee-jerk reaction to ensure that staff had the hardware and the technology infrastructure with which to do their jobs, just to keep the lights on and keep going.
But over the weeks and months that have followed, I think that there has been increasing adoption of new technologies, whether that be the sort of interactions that we are all now used to across Teams or Zoom or something else, and we are now in a phase whereby this is deemed to be the new normal. I think in some ways the pandemic has accelerated, by many, many months, possibly even years, the ability of people to interact remotely and to adopt the technology platforms that assist in their ability to do their work, whether that’s placing platforms, whether that is the various transactional market portals that are available for use by the London Market to do the business that they do.
There’s obviously been a need to adopt these technologies, and i think that the pandemic has certainly accelerated the adoption of these new ways of working. Perhaps not new ways of working for other sectors, but the London Market has been steeped in a history of face-to-face and relationship based trading, and that doesn’t necessarily stop because we are in a new world where we are all in a remote environment, but the adoption of technology and the adoption of smarter ways of working has certainly increased.
Yad: Paul, it’s fair to say, isn’t it, that the London Market has wanted to modernise and digitise for some time. Perhaps the events of 2020 have only accelerated that. But I know that there has been a lot of work done on the future at Lloyd’s and Blueprint One, can you tell us a bit more about that?
Paul: Yes, the future at Lloyd’s is the overarching work that Lloyd’s is looking to the market to adopt to increase the efficiencies of the marketplace and to perhaps adopt new technology platforms and processes to support the insurance distribution network. Blueprint One was the first of many other blueprint documents that do come from Lloyd’s. It’s based upon six pillars of technology process and also the adoption of new technology platforms which were created initially through a project the LM Tom, which was really the first big effort by the London Market to modernise. A really significant amount of time, effort and resource was put into that particular initiative, which finished at the end of 2019 officially.
Future at Lloyd’s is picking up on some of the workstreams that were created as a result and the pillars on which the Future at Lloyd’s work is built, is something which the market is looking to adopt across the area of claims, delegated authority, the subscription model that the London Market is based upon is also under a complete re-think around how the lead follow markets subscription based model works, how that can be made to be more efficient. Using the likes of computer algorithms, you’ve had the advent of syndicate, like Brits Key, which are utilising technology to its fullest extent at the moment. This automation and this need for real data integration is something which is hugely important. One thing that the London Market doesn’t lack is data, but I think the London Market has always faced significant challenge in how to fish for that data and actually mine the data to use it in a meaningful and commercially intuitive way.
Yad: So, I know the acquisition costs in the London Market have traditionally been quite high, and one of the reasons for this focus on streamlining technology and making better use of the data is to reduce those overall acquisition costs, can you talk about that for us a little Paul?
Paul: Yes absolutely. Traditionally, the London Market has been based upon many, many different businesses interacting with each other in order to distribute the capacity that’s available from Lloyd’s and London Market participants, but unfortunately the number of people that are involved in the distribution of this capacity worldwide, centred around London, has come at far too high a cost. The quoted figure of 40% is something which is widely accepted, I think there are reasons to suggest that, in many areas of the London Market, it’s a lot lower, but there are areas of the London Market, and certain products within the London Market, that are distributed, which are even higher acquisition cost.
So the 40% as a rule of average, is probably where we are targeting, and the London Market is targeting it’s capabilities, to actually reduce that cost. In order to be competitive in a global marketplace, because what the London Market really needs to do is ensure that it remains a relevant market for accessing the capacity that is provided for people worldwide, people from all over the world come to London to secure their insurance capacity, but there are epicentres around the world with lower entry fees and lower acquisition costs, so Lloyd’s and the London Market, it’s probably the fundamental reason why the Future at Lloyd’s work was started off, it was really to chip away at that figure to ensure that the London Market and the Lloyd’s market in particular, stays relevant in the years to come.
Yad: Great, thanks Paul. That’s really helpful. And what role to you think that technology is going to play in helping leaders in the London Market drive this change?
Paul: Technology will form a fundamental base upon which the change we’re talking about is actually executed. i think lots of the London Market companies that operate are sitting on old, dare I say it, clunky, systems, legacy systems which have been introduced to the marketplace over many years. But it’s unfortunately created many broken processes, people having to work around very manual processes in the delivery of the distribution of the capacity that’s available in the London Market.
Yad: And I think it’s fair to say that some of those legacy systems just weren’t engineered with many of the modern day processes or ways that we want to work now in mind – you know it was never thought of when those systems were originally conceived.
Paul: That’s right. I think the London Market is probably a bit of a unique market with which insurance is transacted, because the basis of the insurance transaction isn’t just one particular carrier. It’s many, many carriers involving often multiple brokers, the distribution methods, particularly around delegated authority, are particularly complex. The need for the collection of data from people who actually do have delegated authority on behalf of capacity providers, how those insurance companies and those carriers actually absorb and use the data that’s become made available to them, it’s become very, very layered, it’s become very segmented and disjointed, and I think that the systems of old, as you very rightly say, are just unable to manage the complexity with which the London Market operates.
I think in some ways, that to me, is where low-code and other varieties of technology integrations could really, really assist and drive forward the London Market because I don’t think that there is really any particular appetite to rip and replace all of these legacy systems, which have come at huge expense to these carriers. I think that the environment now, is very much to work within the current setup and architecture that exists within these companies, but then use things like low-code to actually accelerate and to improve the integration, improve the workflow, improve the output and also to improve the access to the data which up until this point has become sort of inaccessible.
The ability to manage workflow, to access data which has perhaps been sat in systems, the ability to marry up the data that is in various different systems that a company may have. Low-code is almost a key to unlock the data in particular that is available. It would allow companies to make better, more informed decisions, better informed decisions around underwriting, around claims, around the relationships that they’ve got with their different markets, different brokers – with every kind of stakeholder that may be involved in the distribution of the insurance capacity that’s available in the London Market.
Yad: Yeah, that’s a requirement that I hear about quite a lot actually Paul, from people in the London Market, that there’s absolutely no appetite to rip and replace their existing systems, but what they’re looking for is a way of having new systems that sit on top of those existing systems, bring them together, close some of those gaps and extract data from many different systems so that you’ve got one version of the truth. And, so that you can actually action that data, turn it from data into information. Being able to do that with low-code seems to be a great way to address some of the challenges that we’re talking about.
Paul: The adoption of low-code is something that the London Market is warming to, because of the challenge around connectivity between various databases that sit within these organisations, and the sort of access that can be provided through the use of low-code, the user interface, the user experience that people in the London Market can see by adopting these types of technologies, without having to completely rip up everything that’s gone before, I think is potentially something which could help to simplify processes, it could improve any kind of user experience right across the distribution chain. Ultimately it could reduce costs, and it could chip away at that expense ratio which we talked about previously.
Yad: And of course, we’re already seeing it happen aren’t we Paul, the Lloyd’s Market Association in partnership with Advent in late 2018, launched the Gemini claims expert management solution and that was built on the Liberty Create low-code platform, as a way of really streamlining the way that the market uses the experts that they rely on so heavily.
Paul: Absolutely, I think that’s an excellent example. LMA on behalf of the Lloyd’s Market was faced with a significant cost challenge, because you have a variety of third party experts that would be party to agreements to support insurance in the London Market and they were being faced with increasing costs, increasing delays in terms of settlement of invoices and cash settlements that happen as part of the claims process. Through the adoption of a new platform, such as Gemini, those processes have been streamlined, execution on claims processes has been improved and also the settlement of some of those costs associated with those services which are provided to the London Market have been improved as well. So I think that’s an excellent example that you could present to anyone really, when they’re thinking about how low-code may be able to improve upon an existing challenge that people face.
Yad: Bringing developments to market much more quickly, is absolutely critical, isn’t it Paul?
Paul: Oh completely. I think the future for the London Markets is at a critical junction. As an advocate and a big supported of the London Market, having worked in this market for many years, I think that the opportunity that is front of the London Market is not an insignificant one. I think that the challenges that the market actually faces are large challenges. But I think that, through initiatives such as the Future at Lloyd’s and the adoption of better processes and also the adoption of better technologies, and using technology in a smarter way, I think that the future of the London Market is bright. I think that the London Market has a lot going for it but I do think that there is still a lot of work to be done to get the London Market back up there as a global centre of insurance expertise and get the market back to where it used to be, and where it should be really , in the future.
Yad: At this point, I’d just like to introduce the idea of the Insurance LaunchPad. For those that would like to explore low-code a little bit further, the Insurance LaunchPad is a set of starter applications designed to jump-start your low-code journey. It allows you to implement those applications very quickly in your environment and try out low-code yourself, with some applications that really make sense in the London Market.
So thanks Paul, you’ve shared some really interesting insight today. Just one final question before we bring today’s episode to a close, What do you think the future holds for the London Market?
Paul: Well, as the eternal optimist that I’s like to think I am, I think the future of the London Market is bright. It’s not without challenge, and in many areas of the London Market significant challenge. The complexities of old, need to be reassessed and in as many cases as possible, got rid of. I think that technology and things like low-code can assist in the future of the London Market. The participants and the people that actively trade in the London Market are energised and motivated to make the London Market a much smarter place to do business. To innovate and to be seen as that leading global insurance marketplace.
Yad: Great. Thanks Paul, OK, that’s all we have time for today, we hope that you’ve found this a useful discussion. We have lots of handy resources and information about the work we are doing with the London Market on our website, head to netcall.com/London-Market-Insurance to find it all, and there you can also find details of the Insurance LaunchPad. We are also taking part in a number of London Market online events over the coming weeks, check out netcall.com/events for more info on these. So, finally it just remains for me to say thanks to Paul Rich from Motosi Consulting for joining me today and thank you all for listening.
You may also like
It has been a year of momentous change for business – and many markets have been forced to accelerate their digital transformation efforts to overcome and adapt to new ways of operating.
London Market Insurance – driving impactful insights from our data driven market – a webinar for IT Leaders in the London Market.