Analysis of 49 Lloyd’s syndicates showed early adopters showed a 6% improvement in their aggregate combined ratio, over those firms only just getting started on digital transformation.
Lloyd’s of London syndicates are bullish about the market’s digital transformation, which is starting to see “concrete returns from investment”, according to WTW research.
Firms that have already begun to invest in technological change achieved a six percentage point outperformance advantage over those that have been slower to innovate during the market’s ongoing digital transition, the insurance broker revealed.
To compare performance, WTW polled 49 syndicates, making up some 85% of Lloyd’s market capacity.
Syndicates were asked to reveal where they are on their digital transformation journey in how they make decisions, underwrite, trade and configure their operating models.
Examples of innovation cited include successfully leveraging data assets, decision support ecosystems and digital trading solutions.
The research classified syndicates into three groups by stages of digital transformation.
A “racing ahead” group, made up approximately 30% of respondents, delivered an 89% aggregated combined operating ratio (COR) in 2022.
This compares to a “mobilising” group, which made up another 30% of the subset, and delivered an aggregated COR of 93% last year.
Finally, WTW grouped the 40% remainder into a “getting ready” grouping; these syndicates delivered an aggregated COR of 95% for 2022.
“In 2022, the market was still at a tipping point with a focus on how to deliver operational efficiencies,” said Richard Clarkson, WTW’s global market leader for global specialty, insurance consulting and technology.
“Since then, this analysis shows sufficient momentum has been built to be able to say that the market has now tipped,” Clarkson said.
“Insurance firms across the board are successfully getting to grips with data, achieving better insights into drivers of risk performance and embracing new ways to trade and operate,” he added.