Insight and Intelligence on the London & International Insurance Markets

19 April 2018

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Lord, digitise my iniquities

Mark Geoghegan 7 February 2017

I was a tech pioneer once.

Twenty three years ago I was a young broker working in London. My firm operated with a computer system called Brokasure and as a young user I was asked to trial a piece of software that went under the impossibly futuristic moniker of Broker 2000.

I was initially excited but quickly underwhelmed.

You see, I thought the version of the system I was sampling didn't do any of the things it needed to do.

If one underwriter quoted a price, the system showed the result to everyone else I had sent it to. It also showed that underwriter's subjectivities to all and sundry.

It has always been impossible to show one underwriter what another is worried about without the new player also becoming contaminated with the same crisis of confidence as his peer.

The only treatment for the contagious disease is complete quarantine - a feat achieved neatly and efficiently in the analogue world by quoting on a separate piece of paper.

I duly told the techies that Broker 2000 needed major revisions or it wouldn't be fit for purpose.

Two decades later and it is amazing how little has changed.

The marine market has had a look at PPL and it doesn't like it. The handling of subjectivities and "slip visibility" are an issue now almost in exactly the same way they were to me 20 years ago. Turn to page 4 for all the details.

Many of the objections, such as version control of electronic documents, are valid, but others are not.

The trouble is that when they think of modernisation market practitioners always think this means a way of replicating everything that they currently do, but more efficiently.

Ask a broker or underwriter what PPL should look like and they will describe a system of digital slips.

Push hard enough and some might even envisage virtual box queues.

But the hard truth is that real technological breakthroughs change practices outright.

In the future underwriters will either take a deal they are offered or set terms that they will hold to. They will have to "lead" all their own business. They are already obliged to take a view on it for their own risk and solvency position.

In the age of Solvency II, the days of being able to see what other markets are charging or saying are already numbered and composite pricing will become inevitable because it provides the best outcome for clients.

The end of the subscription market in its current form is probably nigh, but don't shoot the messenger.

Technology is going to enable this to happen and if you don't embrace it, others will.

This article was published as part of issue February 2017/1

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