Bridging The Gap Between Legacy & Future.

Within the London market, brokers and insurers have started to ramp up their transformation programmes after the launch of the Future@Lloyd’s Blueprint 2 Programme.

There are challenges and opportunities for the market in implementing these changes and the extent of these changes will differ if you are a broker or an insurer. Which brings us to the question of how ready companies are to implement these changes?

There is a dawning realisation that the success or otherwise of London market transformation will be predicated on the role that system vendors and subsequent implementation plays in change (of course supporting the necessary behavioural change). We explore the current state of challenges in the London Market, specifically around data and legacy systems and how to address them to become a data-first organisation. There are gaps between legacy and future systems when implementing the Future@Lloyd’s programme that need to be addressed and businesses need to understand what options are available to them to resolve and mitigate these challenges.

Challenges in the London market.

There are three main challenges surrounding data currently experienced in the London Market are:

  1. The London market principally runs on documents (approximately 70% is considered ‘document first’)
  2. The transfer of data from documents to multiple other systems (e.g. policy admin) to another system (e.g. pricing) to another (e.g. exposure management)
  3. Establishing ‘one source of truth’, thereby becoming ‘data first’.

Blueprint 2 establishes data as the foundation of the future insurance journey, with an irrefutable Core Data Record (CDR) being one of the steps to achieving reliable information for processing by the Joint Venture. The purpose of the CDR is to have “standardised, quality data, right first time will make it better, faster, and cheaper to do business in the Lloyd’s market”.

Whilst the who, when and how of the CDR is still being debated by the market, the CDR data set was released to the London Market in March 2022 and has four use cases. Data is required for:

  1. Accounting and Settlement
  2. Regulatory Reporting
  3. Tax
  4. First Notification of Loss

The CDR is focused on open market and fac R/I initial placement. MRCes, Delegated Authority, Treaty and Claims requirements are yet to be determined.

The CDR is the first step, the iMRC is the second. The iMRC is a new set of guidance for the construction of compliant contracts and supports the data collection of the CDR, but not exclusively. The iMRC will require existing MRCs to be restructured and additional data fields to be captured.

Additional data to the iMRC for the completion of the CDR will come from schedules of values and tax schedules.

Thereafter comes data to be moved or enriched between systems, either internally or externally via APIs and the changes to accounting and settlement messages from BSMs/ USMs/ SCMs to EBOT and ECOT (yet more acronyms!).

The Challenge of Legacy Systems.

Today, many policy administration systems have been in operation for many years. They ‘do the job’ and yet will require some or significant change due to the:

  1. Inability to ingest data from EBOT, ECOT, APIs and other data sources
  2. Lack of standardisation of nomenclature of the ‘same’ field – e.g. UW reference, policy reference, policy number, etc
  3. Manual rekeying of data and therefore the inability to update information across multiple applications seamless and in a synchronous manner, alongside the issues of data accuracy
  4. The inability to add new fields to support new data requirements

System changes are therefore at the core of whether such transformation programmes and compliance to the new standards succeed or fail.

“Every organisation operating in the London market will need to change how they operate and be supported by their system suppliers to be compliant.  There is no ‘no action’ option.  Whilst Blueprint 2 is inclusive of all, it will be those that make the shift to being data first that will thrive.”

Hélène Stanway, Strategic Advisor, r10

Aligning the most suitable product of choice to strategic aims.

The question – how do we bridge the gap between legacy systems to the Future@Lloyd’s Programme ready for mid Q2 2024? For those that have yet to make the required changes, transition services will be available for a period. This will mean that those organisations will not be able to benefit from the new “faster, cheaper” services available.

Whilst there are many items to consider – the core questions that need to be addressed.

If you are an Insurer, the main question is:

  • Does the current policy admin system have the ability to ingest data from EBOT & ECOT standards?

If you are a Broker, the main question is:

  • Do you enter data into a core application which can produce both a ‘document*’ and data or do you start with a document and rekey?

The above problem questions apply – whether the application can be developed to be able to perform these activities or indeed whether newer solutions need to be sought.

Another key question is, how ingrained are the workarounds and processes that have been established through lack of automation and straight-through processing?

If your policy administration system cannot perform the above activities – how do you begin to transform your system, process, and colleagues to adjust to the upcoming change?

* There are many varieties of a ‘document’, it could be a Word document, it could be rendered to look like a Word document, or it could be a set of data points viewed like a document in a low/no-code platform for example.

Are out-of-the-box systems the solution?

One of the first gaps we need to address – do companies need to invest more in the existing system/ application or invest in developing or buying another (newer) solution?

This is where many insurers are now turning to out-of-the-box systems, enabling them to be compliant with the London Market transformation.

With insurers and brokers looking at their existing system capabilities and future (soon!) needs, we have begun to see a change in the types of new systems being implemented. For example, companies that may have previously opted for workbenches or in-house built applications are looking to buy applications and systems that best fit their changing requirements. They are also not replacing every component of their suite of solutions but complementing their existing solutions with newer applications to resolve specific gaps in capability.

The r10 partner ecosystem is a good example of how our clients are deploying out-of-the-box solutions to solve specific gaps. By having access to a one-stop-shop of products and services that are brought together by best practice expertise, this provides a flexible approach to change by choosing solutions implemented in parallel with companies’ legacy systems or existing on their own. And newer out-of-the-box solutions are API enabled from the outset – allowing a suite of different applications to communicate and share data seamlessly and minimise re-keying.

Do you need more information on the Future@Lloyd’s?

The Future at Lloyd’s programme aims to build solutions that will digitalise the market, making it better, faster, and cheaper for all participants. For more information on the proposed solutions visit https://www.lloyds.com/about-lloyds/future-at-lloyds/our-solutions or speak to our experts to help you support your transformation journey to becoming ‘data-first’.

The Author.

Georgina Weekes is an experienced Consultant. Georgina’s unique expertise and drive to implement large-scale change with diverse teams, will help propel solution delivery to customers and end users. Her ability to address challenges and find appropriate solutions, coupled with her London Market knowledge will support consistent methodologies, efficient deployment, and tailored implementations.

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