The London Market is currently consumed with the challenge of meeting regulator’s reporting requirements for delegated authority. These requirements are driving insurers to invest in technology and processes to extract and standardise data from the thousands of bordereaux spreadsheets flowing into the market. The business case to invest is typically underpinned by the potential for regulator fines or sanctions (or even worse, public announcements of them). Without the regulatory impetus, it’s unclear whether bordereaux would still be left in inboxes across the market.
Beyond the horizon of meeting our regulators demands is the opportunity to exploit vast quantities of delegated authority risk and claims data for a more noble aim: profit. Delegated authority books, typically high in volume and SME in scale, are ripe for data insights to drive better decisions. Standardised and high quality data enable underwriters and actuarial teams to identify the risk characteristics that are driving claims, adjust pricing, and work with coverholders to sharpen underwriting - driving profitability. Timely, even real-time reporting means capacity can be maximised, not waiting until a contract expires to discover 20% of the premium was left unwritten. Reinsurer rates reduced through high quality data submissions. All of this is before machine learning is connected, opening up the possibilities of predictive analysis.
If only a 1% improvement in profitability (a modest expectation) was derived from such data driven decisions, then the business case for investment in delegated authority data management would be met with ease.
Regulatory needs must be met, but surely better as a by-product of the search for profit in a soft market, rather than the sole objective?