Viewpoint: London cannot afford to ignore the realities of the digital marketplace

14 January 2021. As seen in Insurance Day.

Incremental change delivering tangible improvements, rather than a big bang approach, could be the difference between London delivering on its modernisation vision on time or not.


The launch of Gemini phase II, one of few modernisation initiatives to become operational last year, is a reminder of the urgent need for modernisation despite it being a year of unprecedented disruption. In recent years, several reports clearly articulated the urgent need for transformation because the London market is a burning platform, yet there are those who argue the fire is not that bad. Not acknowledging the issues is not a strategy.


Lloyd’s Blueprints One and Two both highlight the need for modernisation to make the market more agile, customer orientated, accessible and cost effective through digitalisation, emphasising that urgent action is required to maintain its global position. They also highlight the need to be brave if the market is to achieve transformational change, yet the existing sourcing and implementation processes employed to engage the external expertise required are complex, protracted and opaque. We talk a fast race, but walk a slow, careful walk.


There is therefore a tension between the vision and the present reality. Phase one of any project typically involves gathering broad market views and opinion on an issue for analysis. Various conclusions are then drawn but, given the range of opinion that will inevitably exist, the solution recommended tends to be the one most agreed upon by those running the process.


This consensus, which is often the lowest common denominator approach, is then followed by lengthy processes to ensure the solution is 100% watertight. Thorough and long-standing this approach may be, but by itself it will not yield the transformation the market needs quickly enough.


For example, imagine such a project had commenced in 2019 with the aim of detailing how the market’s entire workforce could work from home for an indefinite period and remain compliant with all regulations throughout. The project would have considered the legal ramifications and analysed systems, cyber readiness, technological capabilities, regulation, compliance processes and risk mitigation plans to thoroughly examine the complexity of the overall risk. After several months the conclusion, in all likelihood, would have been it was too risky, the market would cease to function, it was impossible and recommend abandoning the project.


Powerful lesson


Yet in March, when this scenario was foisted on the entire nation, the London market changed processes and adapted to the necessary technology in a heartbeat. Experience may be a harsh teacher but it is also the best and it has taught us a powerful lesson; when we do not fixate on the constraints but are brave enough to take the plunge, market-wide changes can be made rapidly with negligible disruption to our businesses or customers.


Covid-19 has shown the market to be much more resilient and adaptable than we could have previously imagined – achieving in practice what would have been considered impossible in theory.


That is not to say the consensus-gathering approach has no place in achieving market transformation, far from it. Where there is a fog of diverse opinion, frustration and different agendas, the London market associations can bring clarity, unite stakeholders and build the consensus needed to move forward. But could they be braver, perhaps in uniting more often to influence and enable market-wide change with greater pace?


Achieving transformation will require improvements to established processes as well as completely new ones. Given the ambition to deliver a digital marketplace in a relatively short time, observing the world’s most successful technology businesses provides clues about what those processes might be.


Apple, Google, Amazon and others are all continually changing and they do so by constantly talking to their customers. Data and user opinion gathered via instant and ongoing feedback mechanisms informs the ongoing development of products and services. Their success also relies on innovative technologies and all have development teams operating at the cusp of what is possible. Speed to market is also crucial and, while new releases are not always perfect, these feedback mechanisms play an essential role in the refinement process once a product is live. This model constantly delivers incremental change and is proven to drive extraordinary levels of customer satisfaction, value and growth.


Adopting an incremental model that constantly delivers tangible improvements rather than a big bang approach, which can incur escalating project costs and delays that choke the original innovation, could prove significant in achieving the market’s vision.


Pivotal moment


Another important aspect is that the market is now at a pivotal moment in deciding how and with whom it will partner with in making the necessary strides toward its vision. Working with vendors that have a vested interest in maintaining the status quo is also unlikely to produce the transformation required. If the market is serious about transformation, updating the way partners are selected and change is implement should be a fundamental part of that.


The London market has seen its fair share of technology initiative disappointments that were time-consuming and expensive. It would appear history has shaken our confidence. It has also led to over-engineered project management, governance and procurement processes, which seek unrealistic assurances and require solutions to be risk free. This rigid approach to change is out of step with the vision and ill equipped to deliver urgently needed transformation, which will require a much braver approach. Governance, controls and testing are essential, but we need to evolve these processes to better support our desire for innovation and rapid transformation.


Despite Covid-19 distractions and excitement about the incoming hard market, the platform continues to burn and transformation is still badly needed. We might cheer the hard market’s return but our customers will not, especially at such a difficult time for many businesses. If, as Blueprint One says, we are to build the most customer-obsessed insurance market in the world, demonstrating to customers that action is being taken to reduce costs must surely be an urgent priority. This will not be easy, yet, informed by recent lessons, much inspiration and courage can be drawn from the fact our market achieved the unthinkable this year and is much better equipped for transformational change than we previously imagined possible.


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