The development of new technology ecosystems is the most effective way to break down silos and achieve systems integration and genuine collaboration in the London market.
The Future at Lloyd’s programme is aiming to build “the world’s most technologically advanced insurance marketplace”, with Blueprint One setting out key goals and Blueprint Two offering more tangible detail. Meanwhile, the Covid-19 pandemic has brought the benefits of electronic trading to life in a way years of persuasion and mandates had failed to do.
It is not possible to set foot in an insurance conference – virtual or otherwise – without spotting a number of sessions devoted to insurtech and why it matters. Data, distribution, central services, high costs, expense ratio pressure – all of these things are well-known issues for the London market.
You will not hear any argument from me about the fact technology is critical to the London insurance market. Strategically, organisations have an imperative to invest in process improvement, simplification, business transformation, cost reduction and the decommissioning of legacy technology and the benefits offered by developments such as artificial intelligence are undeniable.
But different firms are approaching modernisation in a variety of ways. There is a risk many efforts, if uncoordinated and implemented in silos, could end up simply recreating the existing problems the market faces.
Failing to transform.
Within the London and global specialty insurance industry, we have seen traditional business models replicated over many years. Monolithic, multi-year programmes that attempt to transform organisations and the market at large have been largely unsuccessful.
We see companies regularly facing the same challenges of speed and scale when defining and working on their strategic planning to improve their technological and operational capabilities.
These programmes, which take many years of efforts to replace legacy systems, quite frankly end up producing ever so slightly newer legacy systems. Organisations are increasingly aware of this and looking for an answer to the conundrum. Solutions that can integrate with legacy systems are seen more and more as preferable to long- term programmes that create new systems from scratch and throw the baby out with the bathwater.
Everyone is aware of projects that have ground to a halt and the low rate of progress and overspend proves it is no longer practical or financially feasible for firms to follow a silo-based approach towards transformation.
One issue is firms engage various vendor partners to carry out different bits of work simultaneously. But many months can be lost early on in the process as those partners get to know each other, their working methods, their products and offerings and work to understand which will – or will not – integrate effectively.
What does modernisation really mean and what can help achieve an effective approach? The answer is genuine collaboration, which is critical for success.
In the information about Future at Lloyd’s, the Corporation says: “For more than three centuries, the Lloyd’s ecosystem has brought together the collective intelligence and risk-sharing expertise of the market’s underwriters and brokers, to help customers be braver by providing protection and helping to build resilience.” The second blueprint also talks about creating a “digital ecosystem” to enable efficiencies. That word – ecosystem – is noteworthy and is certainly the approach we take.
How can companies get the most out of new technology and deliver value to their customers faster? Through our work across the London insurance market, we have seen our clients are crying out for an effective way to break down silos and achieve genuine collaboration – not just talk about it. One answer is ecosystems.
Although the term ecosystems is something of a buzzword, as early as 2016 a report from Valans that looked at business model features reshaping today’s markets featured ecosystems as one of these and how companies engage through them. They are usually defined as a flexible network of organisations, co-operating to deliver products or services.
Over the past 20 years working in the market I have seen there remains a gap in integration and collaboration. Our experience shows getting different vendors/providers to work together can be tricky. If you establish an ecosystem, you set up that collaboration in advance, so the end clients benefit in the short term.
It is easy to approach modernisation and tech improvements with a bit-by-bit approach, which risks falling into silos and ending up with solutions that do not integrate properly. Collaboration ensures you end up with solutions that talk to each other and work with each other, which is critical for long-term success.
I have seen bringing like-minded people and products together can spark innovation and development into new areas that had not previously been considered. Integrating the contributions of multiple partners – which can be large or small – combining their capabilities to address problems and using technology creatively and thoughtfully ultimately benefits all the participants in the market, be they carriers, brokers, managing general agents or coverholders.
Whether you call it an ecosystem, co-operation, collaboration or just good old-fashioned conversation, being joined up is the key. The market will reap significant benefits from interconnectivity as those who collaborate find more effective – and cost-efficient – ways of working together.
Published in Insurance Day on the 27th of September 2021.
By Amechi Peirce-Howe, Managing Director of r10 Consulting