Get Data Right

Get Data Right

Insurers in Lloyd’s and around the world face an ever-growing regulatory reporting burden. Many find report creation a struggle. The solution is straightforward (if not necessarily simple): get the central data source right. By ensuring data is high quality and held well in an appropriate system, reporting becomes almost effortless, and need not require seemingly endless reactive efforts.

Companies that get their data warehousing correct will enjoy a side-benefit. Those that have adopted a system allowing flexible reporting for the regulators will also be able to mine and manipulate data for their own analysis, allowing a clearer, more comprehensive, and simply better understanding of their own risks. That can include a better grasp of how individual risks may affect the balance of their portfolio if assumed. However, it is not uncommon for organisations to be too tightly focused on regulatory reports, and leave the potential benefits of improved internal reporting underdeveloped.

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Could the current Atlantic hurricane season impact the availability of capacity for MGAs?

Some of us in the MGA sector will remember how, in the awful aftermath of 9/11, one unexpected casualty of that attack were some members of the MGA community that saw their underwriting capacity withdrawn.

Could the current turn of events in the Atlantic, which started with the unpredicted rain dominance of Harvey followed by the ongoing devastating Irma and unknown potential of Jose and Katia, cause a dramatic change in the direction of the market that leaves some MGAs with capacity issues as they suddenly were in 2001?

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Secure the future as an MGA

At BIBA, the UK’s biggest broker networking event, multiple topics will be discussed over many meetings, conversations, and the odd social reception. This year I expect that ‘defensive strategies’ will be a hot topic among the delegates. With rates down, competition rising, consolidators amalgamating, and the insurtechs nipping at their heels, brokers may be wondering how to gain a competitive advantage that could help them stay in the game. Some will be considering changes to their business model.

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Insurtech is changing the way insurers reach the insurance buyer and MGAs are leading that change

Insurtech has the potential to transform the way the industry engages with its clients, similar to the ground breaking impact Direct Line had on direct selling in the 1980s and 90s. By bringing insurance products straight to the client, via a call centre, Direct Line succeeded in cutting costs and increasing efficiency. Today, insurtech companies could be about to make a similar breakthrough by using apps and online technology, rather than the telephone, but this has so far been mainly directed at the personal lines market.

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What Next for Exposure Management?

Catastrophe models became widespread in insurance almost as suddenly and unexpectedly as the hurricanes that they model.

After the dust settled, and the initial excitement at the opportunities that these products would bring – improved risk selection, optimised portfolios, greater downside control – came the realisation that significant investment was required if value was to be extracted from the noise of data quality issues, portfolio specifics and uncertainty ranges. In essence we’d been handed our first sat nav, only to find it set up in a foreign language.

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What makes an effective insurance board?

The implementation of the senior insurance managers’ regime (SIMR) in March 2016, in response to the financial crisis, might have caused angst amongst some directors. However, for well-run companies such as Asta, the regime simply brought together the reporting of activities that were already standard practice into one place and was in fact a helpful development.

SIMR’s aim is to make insurance company directors more accountable. Although, in my experience, board members have always taken their duties as directors very seriously.

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London market looking towards a positive 2017

I am upbeat about Lloyd’s and the insurance market in 2017. While challenges are plentiful for both Lloyd’s and MGAs I’m sure the market’s entrepreneurial spirt will come to the fore to take advantage of new opportunities, even when they present themselves as difficulties.

While undesirable market conditions look set to persist a while longer, insurers, whether Lloyd’s syndicate, company markets or start-up MGAs, must look at their business fundamentals to be confident that they are creating the conditions in which that entrepreneurial spirit can flourish. To some this means looking at cost-cutting, but the most successful insurance businesses will look more widely across underwriting, claims, distribution, and their associated costs. Identifying where the best opportunities are now and where they will likely be in the future and actively managing them to ensure they remain highly competitive whatever the market throws at them.

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Understanding the uncertainties is key to the effective use of catastrophe modelling

The widespread response upon hearing of the upcoming changes to North America earthquake modelling is “please, not another disruptive model change”.

How have we found ourselves in a place where a significant advancement in our knowledge is perceived so negatively? It stems, I believe, from a misunderstanding of how modelling works, specifically how it treats uncertainty – and a failing of the exposure management community to effectively communicate how those uncertainties impact their work.

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Cyber-attacks: It is not a question if it will happen but rather when it will happen

Cyber remains one of the most significant, growing risks facing UK business with attacks increasing year on year. We are currently in the midst of what some are calling the fourth industrial revolution and as we become more reliant on digital infrastructure and online distribution channels, this threat is set to increase.

The insurance industry is playing a key role in cyber risk protection by developing products and providing risk management advice to help clients protect against this threat. Yet there is a still a long way to go in educating people within our industry and also our clients.

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BLOCKCHAIN: could it offer MGAs the little ‘edge’ in the market that they need?

Everyone has heard of blockchain. It’s the latest technology touted as revolutionary for insurance. Far fewer people, I expect, understand exactly what blockchain does, or how the mooted revolution will happen. Almost no one knows precisely how blockchain works, but that’s part of its appeal: it apparently has been declared unhackable. And it’s catching on: the technology now has big-beast backers in IBM and Microsoft (each has launched a dedicated service). Blockchain has merit.

Blockchain’s purpose is simple. Imagine an old-fashioned ledger with a locking clasp. Entries can be made, but never changed. The pages can be seen only by those who have a key, and no one can tear any out, but (magically, in this example) multiple copies exist. When one copy is updated (adding a new ‘block’ to the ‘chain’), all the others are amended too, instantly. That’s where blockchain is special: it is a ‘distributed ledger’. Entries can be made by as many people or organisations that have access, but the ledger requires no central clearing house. There’s a clear explanation by PwC here.

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Dive-in

Pioneers of diversity and equality, such as Emmeline Pankhurst in the early 20th century and Martin Luther King in the 1960s, called for change based on moral principles. The impact of their campaigns over subsequent generations has created an accepted moral imperative for diversity. Today, business has gone beyond simple morality, and it is now clear that there is also a financial case for diverse organisations.

At the Lloyd’s sponsored Dive-in festival in September, the Asta HR team attended a number of thought provoking events and we are adding the lessons learnt to our thinking, as we seek to deliver meaningful diversity across our business.

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London on the up

London (re)insurers should be optimistic, despite the gloomy talk that tends to dominate market conversation at the moment. Even with the challenges facing the London market and despite the rigors and regulations, players from all over the world are clamouring for a piece of London’s action.

On Sunday morning we announced the launch of OverArk, a new managing general agent (MGA). It’s our second such venture after the launch of Pelican last year and demonstrates our commitment to this growing market. We are leveraging our considerable skill base and experience of incubating Lloyd’s syndicates so that what we are offering is very attractive to the highest quality MGAs. The acceptance of MGAs as a valuable and efficient part of the insurance value chain, even when they are located in London, has created a great new opportunity.

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