Digital Distribution in the London Market: Moving forward with Blueprint Two

Blog -- 21 September 2023

Author: Marketing

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At the 2023 Verisk Insurance Conference in London, one of the key panel sessions looked to discuss the future of digital distribution in the specialty insurance market. Moderated by Claire-Louise Grant, Product SME, the panel featured Bob James, Chief Operations Officer at Lloyd's of London; Kirstin Duffield, CEO of Morning Data, a Verisk business; and Richard Burge, Market SME, Specialty Business Solutions at Verisk.

The discussion centred around the London Market change programme Blueprint Two, which aims to enable market digitisation and improve operational efficiency for underwriters and brokers. Launched in 2021, Blueprint Two is a multi-year initiative to transition the London Market including adoption of standardised data.

Kicking off proceedings, Bob James made a key point that, "the biggest issue is getting the market to move together to be ready for the cutover to the new technology platform."

Kirstin Duffield agreed on the importance of the cutover but cautioned that this should not lead to complacency about longer-term change. "We need to get away from the idea that June is the end point," she said. Ongoing work will be needed to leverage the full benefits of electronic trading through additional data and new technologies.

Richard Burge highlighted that carriers face the biggest transition challenges in phase one, as they adapt their systems to consume new message formats defined by the Core Data Record (CDR). He advised engaging closely with solution vendors to ensure readiness. Panellists noted that while the CDR tackles some key use cases, it is only the starting point for innovation.

Beyond the cutover, the panellists highlighted broader opportunities from digital distribution, but stressed that realising these requires a cultural shift. As Kirstin Duffield put it, "We're no longer in the insurance industry, we're in the data industry." Collecting and leveraging data will enable innovation in risk analysis and customer service.

While efficiencies matter, the biggest benefit of Blueprint Two is future-proofing to maintain London's standing amid rising competition. James noted that other global insurers are already digitising faster.

The panellists were optimistic about the London Market's digital future. "There's an opportunity for brokers to move their digital strategy forward," said Burge, whilst Duffield emphasised that the programme provides "an opportunity, not a threat" and challenges brokers to find new value for clients from improved data.

The panel agreed that adoption will require focus and commitment, but the prize is a more resilient, innovative marketplace. As James concluded, if historical innovations like the telephone were proposed today, the cost-benefit analysis might look unfavourable. But just as telephony is now integral to business, comprehensive digital distribution will likely be a baseline expectation in future.

The panel made clear that digital distribution brings operational efficiencies, but its greater impact will be enabling the London market to harness data for competitive advantage. However, unlocking the full benefits depends on sustained engagement across what is a complex ecosystem.

The Path to Full Electronic Trading

While digital placement has grown, much of the London market still relies on manual processes. Duplicate data entry is common as information passes between brokers, carriers, and other entities. The Lloyd's Corporation estimates that Blueprint Two will generate £3.2 billion in gross benefits over 10 years, primarily through streamlining operations.

However, numbers alone do not capture the full context. The Lloyd's and London insurance market handles complex risks that often require negotiation between multiple parties. Personal relationships have traditionally been crucial, with face-to-face trading an integral part of how business gets done.

Blueprint Two marks a seismic shift, transitioning the market to fully electronic trading underpinned by standardised data. This will eliminate friction and errors from manual processes. But it also changes how carriers, brokers, and clients interact and forces new ways of doing business.

The common data standard lies at the heart of the transformation. Implementing a single definitive source of policy information unlocks straight-through processing. But it requires upfront investment from across the market to integrate systems and agree on data collection.

Ongoing change management and training will be vital to drive adoption. Firms must ensure their staff and partners understand not just the technical changes, but the cultural transformation. People may be used to collecting data in certain ways or relying on personal links - Blueprint Two requires breaking old habits.

Delivering these changes successfully will be a complex coordination exercise. The Lloyd's Corporation provides central oversight and governance. But ultimately, the shift relies on collective market-wide action, which is inherently challenging to orchestrate.

Though the full impact will take years to materialise, panellists were bullish on the modernised market's potential. James concluded that digital distribution not only boosts efficiency, but also cements London's status as an innovative global hub able to attract ever-more complex international risks.