Insider Tech Live – Electronic Trading

In our opening blog on the recent Insider Tech Live conference, we reported on the health of the InsurTech market and the development of embedded insurance. In this blog we turn to the discussion which focused on how the use of electronic trade has rocketed during the pandemic.

As one panellist said: “I struggle to think how we would have coped without electronic trading.” The big mistake to avoid is to take a paper-based process and replicate that in the electronic world, which gains nothing. The idea is to create data driven processes as data first. Completely rethink our business chains and business models both for the underwriter and the broker. Imagine a world in which an underwriter receives the submissions all data driven.

The first step is a machine learning piece of software which alternates and essentially triages the risk for the underwriter with pre-digested information, focusing on the risk which really matters and which fits in with the underwriting window, with exposure modelling. It then provides responses to the broker in a much faster timescale and perhaps can evaluate 100 risk an hour, not one risk an hour.

Better Price Discovery
Then from the broker perspective, imagine a world where the data from the big corporates is ultimately processed and transmitted directly through the PPL and enters the underwriter world. Then the broker manages the pipeline of submissions to the underwriters, knows which risk, when, where and what is the likely responses which can therefore deliver much better service to their corporate clients. So, we when you read the Blueprint, the rationale is about cost savings, but actually the benefits go far beyond and include better price discovery, better efficiency of the market, better allocation of capital, and ultimately writing many more risks and more difficult risks. That is the future 5-10 years from now.

Analytics Apps
According to one panelist, there is huge scope for startups and InsurTechs to engage with the market. One example given was the need to partner analytics with a user interface, adding functionality around Sanctions  checking. This is indeed a tool that DOCOsoft has already successfully developed and rolled out with a number of our clients.

Other tools and functionality mentioned by a panel at the Insurance Insider event include a piece of software focusing on the visualisation of construction sites, mapping them using visual technologies, primarily to aid architects and engineers. But this tool has evolved into risk management and then into an insurance application. Another example in analytics, is a company which was set up to manage solar panel assets. So, if you have a solar panel form, it tracks the assets, their usage, the output and again evolved into risk management as an insurance application.

There are many other examples: in mobility humanising autonomy, which is about assessing human behavior versus self-driving cars, in agriculture helping farmers with their prices. The panel says this goes far beyond the concept of embedded insurance. Rather it’s about convergence, about what technology does in other sectors where we can add value, and at the same time being directly plugged into the risk and insurance value chain. In the next blog on the Insider Tech Live event, we focus on predictive analytics and the importance of developing tech skills in insurance.