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Moving from the hype to the commercial reality of technology driven change
The report is compiled based on the results of the TINtech London Market online survey and interviews with business and technology leaders from across the London market value chain – I’d personally like to thank all those that took part this year and I hope you find it a useful read.
As always commentary from me will be left to a minimum and I’ll let the comments from your industry peers do most of the talking.
This year we started by asking what are the top issues facing the industry and not surprisingly the LM TOM and the initiatives they are driving forward featured high on the list. Respondents were not only looking for updates on PPL, CSRP, SDC etc but also on the future opportunities, efficiencies and market structure that new technology could enable.
Some comments included:
Interestingly, after 18 months of the hype around Blockchain and its transformational potential for the London Market (and FS more generally) the survey reveals a growing scepticism or at least questioning of both the technology and the problems it could solve. Only 28% of respondents thought that Blockchain would have a fundamental or significant impact on the market with over 70% saying it would have little or no impact.
The statistics were borne out in the comments from interviewees who were looking for the business case around this technology:
This comment summed up the sentiment of those I spoke to quite nicely:
“(I’m looking for) practical examples of Blockchain (Distributed Ledger) in London, reinsurance, claims, etc. I would not be interested in the theoretical or hype-filled examples. Just actual, real uses at scale.”
On the flip side, over 90% of respondents agreed that data and advanced analytics would significantly or fundamentally impact their business. Most cited operational efficiency and reducing error rates as the main driver for investment in this area (an issue that has been rumbling along in various guises throughout the 15+ years I’ve been working in the market!).
However, there were those that looked at the customer service and underwriting opportunities that could provide a differentiator in the future:
Closely related to any discussion on data is automation, and again the majority were investing to improve operating performance and reduce costs:
Of course, there is always one exception that proves the rule!
We don't need RPA because our systems already talk to each other, so we don't need to further automate anything here. We see great potential for AI and have started some projects in this area but right now we have nothing delivered…we are making great improvements to our advanced analytics abilities.
Can’t wait to pick their brains at the conference in Feb!
Throughout the research for this report there was an underlying sentiment that the pace of change needs to quicken if the opportunities that digital technologies presents to the market are to be grasped. As one put it, “if the London Market doesn’t shape up it will become less and less important in the complex insurance space.”
I also got the sense that there was a nervousness to talk about fundamental rather than incremental change either because it was politically uncomfortable or the will within market participants was not fully there. However, some did put their heads above the parapet to ask the tricky questions:
Despite some frustration, most people, and I’m one of them, feel that the pace of change is moving up a gear and we are at a very exciting time of opportunity for London to innovate, change and remain at the heart of the complex insurance world.
Crucially almost everyone is over the ‘InsurTech’ hype of 2 years ago and are back to focusing on how technology can help solve real-world business challenges, enable better business process and foster a culture of innovation. The right business questions are being asked and digital technologies are being applied where appropriate to deliver an ROI – of course the critical questions facing directors is how you achieve this successfully.
In the medium term the trend is for these digital technologies to converge, changing both the traditional industry dynamics and the broker-underwriter-client relationship. I’ll leave you with this, rather long extract, from an interview I conducted which sums up the mixture of excitement and anticipation as we move forward:
"That's something I think is warming up around the market and also around the industry as a whole. How is it all going to come together in 2019 and 2020?"
TINtech London Market is the leading technology strategy and innovation event for the market taking place on 5th February 2019 in London.