The London Market has undoubtedly passed the tipping point on which core system it views as most critical to staying competitive and compliant. As carriers drive towards becoming more data-driven and less process-driven, they’re finding, after much experimentation and frustration, that Policy Administration Systems (PAS) are not best suited to provide the data connectivity and workflow/business logic flexibility required. After all their primary purpose has always been the administration of bound contracts.
We are now entering the ‘deep workbench’ era; in which pre-bind technology is the central cog in the underwriting technology stack, providing end-to-end orchestration, high connectivity (to the burgeoning ecosystem), and a high speed of change. This doesn’t replace the need for PAS systems, of course, they still have a key role to play, but it means a refinement back to their core purpose. Whereas they’ve steadily fattened over time, with a modern ‘deep’ workbench, carriers are now looking for a right-sized ‘skinny’ PAS.
PAS de probléme?
PAS have historically been great for the job they needed to do. Before the advent of ‘Big Data’, the value of a policy was better managed throughout its lifecycle, and traditional PAS included everything carriers needed to manage their policies once bound. As post-bind regulation was and is crucial, these systems had to be robust to ensure carriers remain compliant, oversee policy management, and understand what they’re at risk for. Any data underwriting teams needed was captured post-bind and manually recorded in systems.
During this time, pre-bind processes could be easily managed ‘offline’ because underwriters could rely on their relationships, and skills and, with less data available, record everything they needed in Outlook, Excel, and Sharepoint.
However, the balance is shifting.
Dynamic market forces
Converging market forces are driving a pre-bind revolution to ways of working and supporting systems. Investment previously funneled into post-bind is now pouring into platforms such as underwriting workbenches and pricing toolings. Insurers are increasingly recognizing the benefits these systems help to improve the Combined Operating Ratio (COR) and furthermore, providing a foundation for what’s needed to stay competitive in the next 5-10 years.
Data is the biggest driver of this shift. The abundance of data is a gift for underwriters, helping them to understand, assess, and price risks more accurately than ever before, but the more data available, the more time underwriters must spend sifting through this influx of data, ingesting, storing, and assessing it to find the best risks and the right prices.
This brings us to the second driver behind system change, operational efficiency. Underwriters risk drowning in data if they don’t have user-friendly systems that can automatically ingest, store, and interrogate it. They regularly tell us that they’d love to have the time to work their magic on more complex risks, explore new lines, and strengthen their vital broking relationships. Still, they’re caught up in the manual processing of data, using email, PDF, Excel, Sharepoint, and swiveling between multiple systems. Therefore, without a more efficient way of getting insight from this, data carriers simply cannot hope to unlock its full potential – the effect would be more underwriting administration and higher expense ratios.
A final driver is regulation and compliance. With more data being handled upfront than ever before regulators, reinsurers and investors are demanding systems that can be relied on to provide greater oversight and control of critical business decisions and more secure methods of collecting and storing data.
(Un)fit for purpose?
As investment shifts to the pre-bind market, underwriting workbench technology is becoming more functionally rich and better suited to the complex tasks required of it.
Proto underwriting workbenches offered a ‘single pane of glass’ for underwriting data, allowing underwriters to see everything they needed in one place but not providing the central orchestration capability required – they only solved one part of the puzzle.
From there, however, underwriting workbenches have matured quickly. Today’s underwriting workbench is deep in functionality, providing a platform that unifies modern workflows, data models, and document storage into a single seamless experience. As the technology behind them is newer, these platforms are more agile, built for change, and allow for best-of-breed partnerships with other bespoke software. That is the power of the Send Underwriting Workbench, it is a perfect tool for busy underwriters.
This doesn’t mean the Workbench has to be all things for all people, far from it. For example, the Send Workbench doesn’t provide a rating capability, rather it allows users to seamlessly interact with their existing Excel raters or purpose-built pricing applications. Our recent partnership with pricing platform provider, hyperexponential, allows users to seamlessly access their pricing capability, without changing the system or re-entering data. This is the beauty of workbench solutions like ours, they facilitate a rich ecosystem, where the best elements of underwriting technology can come together to empower underwriters. The revolution isn’t much of a revolution if it’s just changing a post-bind monolith for a pre-bind monolith.
In contrast, many PAS are now considered legacy. Most were built before the cloud was mainstream and aren’t easy to evolve and respond to a changing market.
London’s tipping point
The PAS vs workbench challenge is a global trend but perhaps most acute in the London Market where the focus on specialised risks has, until now, meant pre-bind systems frustrated and constrained underwriters. Market dynamics demanded more sophisticated technology with the ability to weave rich data handling, alongside document management, in a flexible process aligned to market risk structures and subscription models.
Another characteristic of the London Market is the proliferation of legacy policy admin solutions, with some carriers having multiple instances that have accumulated over the years. Some of these have been around for decades but have been left alone, as long as the messaging kept working, through lack of a better option. However, their architectures are not built for modern integration patterns so with the promise of better structured pre-bind data via placing platform APIs and new message formats coming courtesy of Blueprint II – the time for them to be finally sunset is almost upon.
This is a further impetus to invest in the pre-bind space, to not only yield the benefits of smart, efficient underwriting but also to prepare for, and de-risk, upgrading legacy policy admin systems.
Change is coming. With the rise in ‘deep workbench + skinny PAS’ London Market insurers are seizing the opportunity to leverage new technologies. Not only to enhance their underwriting today, but importantly, to ensure they are ready to navigate whatever the dynamic insurance market throws at us over the next 5 -10 years.
Written by Lloyd Peters, Head of Revenue. Get in touch with Lloyd on LinkedIn.