London Market must embrace technology to retain its global position
Modernisation is absolutely vital for the future of the London Market. Bavita Rai looks at how technology can help the London insurance market.
Modernisation is absolutely vital for the future of the London Market. It is steeped in more than 300 years of tradition and combines professional richness with deep expertise that, arguably, nobody else in the world can match.
Even so, there can be no resting on laurels, especially because the march of technology represents both threats and opportunities. For the London Market to maintain its position it needs to embrace technological change. Only by doing so can it compete effectively on the international stage against increasingly digitised rivals.
The London Market Group’s Target Operating Model (TOM) is essential to driving this programme of technological streamlining.
With such a large and diverse market, there is bound to be some degree of resistance to change. However, if you look at issues such as End User Computing (EUC) governance, along with the need to protect profits while satisfying clients’ needs, it becomes clear that technology is vital to delivering the best service at the lowest price.
If the London Market is going to retain and build on its globally dominant position, incorporating new systems into its working practices is critically important.
One thing the London Market has always been rightly proud of is how it deals with complex risks. This is one of its key strengths, but how many of those complex risks need to be handled face to face and what percentage could be done – or at least facilitated – using technology?
Since the launch of Placing Platform Limited (PPL) – an electronic platform to support a more flexible negotiation and faster placement – significant progress has been made. Placing Platform Limited now accounts for nearly 10% of business generated in the London Market based on the three classes of business available so far.
Placing Platform Limited is not about getting rid of face-to-face negotiation – quite the opposite. It is about ridding the market of duplication and administration, leaving more time for the value-added activities. It is about everyone having one set of correct information when they talk about a risk and data being entered once, and once only. David Ledger, Chairman of the PPL board, is on record as saying that PPL is the first step in ensuring the London Market is fit for purpose in the 21st century.
In a poll conducted by TOM in September, respondents were asked if: "Face-to-face negotiation, combined with digitalisation of data, would deliver a faster placement service within the London Market?". 72% of respondents agreed with the statement, indicating that the benefits of technology in supporting face-to-face negotiation during the placement process are being increasingly recognised. If you look at Brexit and the broader global picture, the main challenges facing London are to retain and increase its market share of existing and traditional business, and to capitalise on the many opportunities from global emerging markets.
Digitalisation is fundamental to modernising the London market, streamlining processing and making it an easier place to do business, essential in today’s increasingly competitive markets.
In 2016 and 2017, TOM focussed on building and designing the solutions that deliver modernisation to support the future success of the market. Many of these solutions are now available and 2018 will be about market firms adopting these solutions to take advantage of the benefits they provide. Looking to the future, the London market can take this opportunity to embrace change, modernise and forge ahead as the world’s leading insurance hub.