Data, data, everywhere - Peter Smyth, vice president of PlacingHub developer Ebix Europe, shines the spotlight on the data-driven approach, swift onboarding, and API-first strategy that are now essential elements of successful London market electronic placement platforms
2023 is shaping-up to be the most interesting year for electronic placement in the London Market since 2016, when a single central platform was considered the only way to get electronic placement adopted. That may have been the right approach then, but since the introduction of new vendors the competition is becoming fierce among the market’s multiple providers.
And that’s a good thing. Competition is the breeding ground for innovation, and ultimately better platforms and service levels for our market.
The main job of a placement platform in the global specialty re/insurance market is to reduce the inefficiencies of face-to-face trading paper contracts - but critically, without actually doing away with face-to-face negotiation, which is still a vital component of London’s practice for the more complex risks.
Replacing the slipcase full of paper with digital documents and trading them on an exchange has been achieved with great success over the past six years. In fact, over 200,000 placements were conducted on PPL in the year to March 2023 which is a very high proportion of London’s placement volume.
Technology is moving fast, though, and it’s now about data. Electronic contract documents in Word and PDF format may be “digital” but they’re certainly not “data” and have now become the new bogeymen - and not without good reason.
Getting the data into them, and then out again, is a waste of time and resource, not to mention the errors and ambiguity it introduces. To be a truly digital market, as envisaged by Future at Lloyd’s and the Data Council, the documents have got to go the same way as paper did, and the data needs to flow straight through. No manual re-entry, no duplicative effort, no errors.
So what does a good platform look like in 2023?
Onboarding speed is now an essential element in the competitive landscape for London’s electronic placement platforms. Firstly, this means the shortest possible learning curve with intuitive, easy to learn, familiar software demanding the absolute minimum navigation, clicks and keystrokes to transact the business. Clunky and complicated are no longer acceptable, although complex will never disappear - London market business process is complex and varied, and platforms have to accommodate it all.
Training programmes must be short, with online videos and contextual help for users. Gone are the days when they would tolerate a full day of training, a 200-page manual and a month of familiarisation before they could be productive.
Secondly, data integration is now critical to ensure brokers and underwriters can quickly and easily exchange data between their existing systems and the electronic placement platform to dramatically reduce duplicate keying, errors and omissions. And to get rid of those Word and PDF contract documents.
The challenge has always been that companies often have many different data sources, destinations and systems, which have made the onboarding process complicated, time-consuming and expensive. But the technology exists to overcome this, using APIs (Application Programming Interfaces) to plug into in-house systems, integrate securely and exchange the data required.
Without the APIs, rekeying is the order of the day and that’s just not acceptable in 2023.
Once integrated to the platform’s APIs, brokers, for example, will upload the raw submission data which then becomes available to the underwriter in an instant. No contract documents to get in the way. Just a couple of clicks, and the data is available securely to the underwriter, presented in a simple, slip-like manner for familiarity.
After that, generally speaking there are a couple of competing ways in which the negotiation then ensues.
First is the traditional offer/counteroffer, familiar to insurance practitioners and lawyers since the dawn of time. The broker presents a draft contract (which in 2023 is made entirely of data) to the underwriter who can either accept it or make some suggested changes, and that new contract version is returned instantly to the broker as the counteroffer.
Rinse and repeat until a mutually-acceptable deal is struck, at which point it can be bound and a PDF version produced to send to the client.
The other approach is the “live”, real-time method, where the data contract is made available online to both parties simultaneously. Think Google Docs but with discrete data fields and validation. The negotiation proceeds in that one place until the deal’s done whereupon it can be bound.
Which way is better? Neither, but everyone will have a preference. That’s what competition is all about.
The efficient exchange of data
It doesn’t end with contracts either. Data can come from underwriters as well as brokers, with quotes for example. The underwriter’s pricing systems can be connected to the platforms with APIs and the data can flow between the two to eliminate re-keying effort and errors during the quoting process.
It’s hard to believe that only six years ago, the market was struggling to come to terms with electronic placement at all, and here we are now with 20,000 users conducting 200,000 placements a year.
It took the pandemic to prove electronic placement was a benefit not a threat and, now it’s here to stay, we’re heading full steam towards a truly digital marketplace.
There is finally healthy competition in the electronic placement market now, and also strong demand helping to shape what “good” looks like - a data-driven approach, swift onboarding, a slick user experience and an API-first strategy.
Ultimately, any trading platform that cannot do all of this is going to be in trouble.