Simon Cooper, Head of Underwriting Insight — AEGIS London.
What will the digital syndicate of the future look like? AEGIS London’s Simon Cooper has been tasked with finding the answers now.
If you ask people to speculate about how their role will change in three years’ time, they really won’t be very imaginative. They might volunteer a suggestion about hybrid working or the need for better processes or data, but what they’re really thinking is: how do I protect my job from changing? In the short term, self-interest has a habit of getting in the way of visionary ideas; which means that while you asked for enlightenment, you get an answer anchored in the past.
To initiate the task of preparing AEGIS London’s syndicate for the future I learned that ten is the magic number. At a distance of ten years, people are much more willing to talk frankly about the ways in which their roles will be impacted by technology. The more distant the time horizon, the more creative people become, and once you know your destination you can start backfilling the changes required to achieve a modern digital syndicate.
It is imperative that all companies in our market invest time in this process because the opportunity for change is greater than it has ever been and significant advantage will accrue to those that get it right.
So, let’s focus on what our modern digital syndicate might look like. Data and digitisation will be its technological bookends, enabling greater insight on our business and slicker processes. Here’s an example of each.
As regards the underwriting process, once every submission is presented with pure data (a challenge that alone feels likely to take most of my ten-year horizon!) it can immediately follow a workflow – more advanced than the conveyor belt concept we perceive today – which actually enhances the risk assessment through various additive functions.
Risk relevant data from alternative and complementary sources can be applied – information that the broker doesn’t provide but which we have evaluated and trust. An initial question set can be generated automatically in response to the presented data, possibly filling in gaps, for example. The presented terms and conditions can be mapped against standard Ts & Cs.
In addition, a triage system can be introduced which could also produce appetite rankings, so underwriters can focus on the most attractive risks. Pricing systems can be auto-populated; alternative quotes or risk structures can be obtained.
As regards the use of data to provide underwriters with improved insight into their risks, underwriter dashboards will summarise risk relevant information from multiple feeds to improve their decision-making. Traditional policy administration screens are full of numbers that are more useful to the finance team than underwriters whereas they should be detailing portfolio optimisation factors such as marginal impact assessment, pricing feedback, exposure management impact, external data feeds and hygiene ratings as regards their premium payment times or the slip quality.
Some might find those examples enlightening and some may find them rather obvious; that doesn’t matter. What matters is building a momentum throughout the business to be creative. By their nature, dashboards and intelligent workflows make use of outputs from every area of the business, so all areas need to advance in step.
This year, throughout AEGIS London I am seeing evidence of building towards the future state. We are treasuring our data more with governance and quality controls (note that the same data is used in both examples above, but for different purposes). We are producing management information and actuarial analytics on reporting platforms that are light-years ahead of the two-dimension reports of the past. We are experimenting with complementary data sources and evaluating their application. We are building our technology infrastructure ourselves, but also evaluating the specialist products offered by the new breed of providers. Our organisation profile is changing; we recruit people for R&D and have a Change Team that makes sure we get things done. All this whilst still fulfilling the syndicate’s primary function: writing a well-diversified book of sustainable business profitably and to the benefit of brokers and clients.
While looking to be innovative, we are also realistic. We recognise that not every aspect of our operation should be governed by metrics or algorithms. Speciality insurance, London’s signature dish, is not formulaic; it is broad in coverage and lacks homogeneity between risks, even within the same class of business. We definitely do not predict that there will come a time when every one of our complex books of business can be underwritten by machines. There is no substitute for the understanding and knowledge that an underwriter provides. There’s a human factor there that, if we design it out of the system, will rob the market of its greatest asset. Our aim is to develop the digital initiatives that will provide underwriters with the best insight to the risks available.
Delighted as I am with the practical progress that we are making, I cannot emphasise enough the essential ingredient of communication. We are starting to see the benefits of having discussed the future, the ten-year vision, over the last few years. And the beauty of the ten-year forward vision is that we never actually get there. With New Year only a few weeks away I look forward to moving my attention towards 2032.
First published in Insurance Day 3 Dec 2021.