The reaction in the insurance industry to the Covid-19 pandemic has been a rapid move towards greater digitalization, mostly successfully, although there are sectors of the insurance process where there is still some distance to go.
This was the general conclusion of a webinar held last week on ” Covid-19: Long-term change in the London Market?” by Cannon Events, in association with Concirrus.
Andrew Yeoman, CEO of Concirrus, said that there was no longer any debate about digitalization happening. Its inevitability was accepted. However, he noted that “even in the latest Lloyd’s results the combined ratio was 116% for marine. That was better than 2018 but there still is a long way to go. It’s not unreasonable to expect an insurer to make money from time to time. I think there needs to be strong steps in that direction about the efficiency of the process.”
Phil Graham, Head of Marine, Chaucer Syndicates, said that there was more that needed to be done. “The quote process is a little clunky at the moment. Luckily there is some competition in that environment and the position is getting better.”
Graham said that the “real change” he would like to see was to push the digitizing of the process into insurer systems. “There is still too much dual keying of information” he said, adding that “I sat down and worked out that for one piece of business you could get 20 or 30 people in the various markets inputting the same piece of information. That single dollar of premium has to pay for all those 30 people.”
Nick Shaw, CEO of the International Group of P&I Clubs said that personal contact had been one of the cornerstones for clubs, but club underwriters had perforce been speaking over video with their clients “and I think that some of the lessons that they have learned will persist going forward. There will be less travel.”
Graham noted that he had sat in on a presentation last week where it was highlighted that 62% of their policies represented less than 8% of their premium. “There has to be a better solution to handle that 62% of their policy count. I think there will be segmentation in the manner in which we approach clients. That will free up time for specialist face to face conversations with clients who really do need a unique policy. I think there will be a stratification in the manner in which we service our clients”, he said.
Yeoman also noted that that Concirrus had been advocating the notion of “elastic” policies for a while.
Yeoman observed that in the past few years hull premiums had been drifting east. “We are in a state of the unknown. We don’t know the extent to which there might be a withdrawal of capital from the market. We don’t know what the new better capitalized markets might look like, whether that will change the way policies are written. We could see new sources of capital, new types of entirely digital insurers, perhaps automated and parameterized policies, but we don’t know. We do know that we will see a period of significant change”, he said.