No. 6, August 2023

Insurance data and technology commentary and news from Quotech Founder Guillaume Bonnissent.

Such a good IT services company

My friend’s dad used to have a bright white Volvo station wagon in which I’d catch a ride to school when the weather was bad. Sometimes not, though, because the car was – in my friend’s dad’s words, “a lemon”. The car broke down all the time, frequently leaving us to walk through the winter snow.

When the unreliable banger was replaced, I was both relieved and bewildered. I was happy to see I had a new ride for adverse conditions, but astonished that my friend’s dad had bought another, slightly newer, white Volvo station wagon. When I asked him why, he said it was a simple decision, because: “Volvos are such good cars.”

Why, I hear you ask, are you sharing this reminiscence, Guillaume?

I was reminded of the Volvos in July, when we heard news that Lloyd’s and the IUA were negotiating their way out of their decades-old “perpetual non-compete” contract with DXC, the self-described “IT services company using the power of technology to build better futures for our customers, colleagues, environment and communities”.

DXC is the market’s private sector partner in the Joint Venture that operates its shared premiums and claims processing bureaux. Many people I spoke to expressed their glee at what was seen as a divorce, since – to put it mildly – the market’s bureau services haven’t always met expectations.

But that’s only part one of the story. By month’s end we were reading that the market’s powers-that-be are working on a major new contract with DXC for new central digital services under Blueprint Two. So: no divorce. The current deal, worth about half a billion pounds, is reportedly to be replaced by a new “Digital Processing Services Agreement” that covers all the market’s premium and claims systems.

DXC is widely admired (if not loved) for having cannily negotiated a deal with the market that allows them to charge syndicates and company-market carriers when they put their data into the system, and to charge them again when they take their data out. DXC and the Joint Venture are also seen as particularly effective at answering the complaints which occur when the system goes down for 24 hours or more, something which one syndicate claims manager told me: “the banks wouldn’t tolerate the first time, let alone multiple times.”

Obviously, despite its charging structure and the reliability of its system, London is getting back into bed with DXC because it is such a good IT services company. I wouldn’t for a second argue that Quotech is in a position to compete. However, for half a billion squid we’d be willing to give it a go..

Beware the frumious Betamax

I have been a vocal supporter of the London Market Group’s effort to put the cart firmly behind the horse by establishing, through the Data Council, a set of data standards for electronic trading. Agreeing of the language of digital communication is clearly the essential first step in any digitalisation process. As London market processes go, it has been completed by the Council amidst a remarkable absence of contention. That’s perhaps because it attracted the attention primarily of CEOs who see its wisdom, and technicians who understand its necessity. I hope the next step goes equally smoothly.

The LMG’s next wise digitalisation trick was to appoint the same, effective Data Council to decide what comes next, and who should do it. To set these out, the Council has now published a tome entitled: “Process, Roles, and Responsibilities Final Recommendations: What We Recommend For Open Market Placement.”

The central objective, the publication states, is to “ensure effective creation, approval, submission, and handling of the data required in a Core Data Record (CDR).” The CDR is the electronic file which holds the details about every risk insured or quoted in London, formatted according to the agreed Acord standard. “The focus of the PRR Working Group is exclusively on the ‘who’ the ‘what’ and the ‘when’,” the document declares. “The ‘how’ remains at the discretion of market participants and solution providers.”

I hope the how is addressed with equal skill and decisiveness. We very much need to ensure that, with data standards agreed, we do not create new digital road blocks through the adoption by market participants of systems from solution providers that do not respect the necessity of avoiding incompatibility. To put it in old-tech terms, we have been plagued in London by the Betamax problem for decades. The time for the VHS revolution is long overdue.

Elsewhere in the news…

Some data stories that caught my eye:

In the busy world of the European Commission, the Joint Research Centre (Europe’s self-described “science and knowledge service”) has published a “Science for Policy” report entitled European Data Spaces – Scientific Insights into Data Sharing and Utilisation at Scale. The report is important because, we assume, European policymakers will pay attention to its findings when making regulations about data use by insurers. To save you wading through, the report’s two key findings are:

    1. “No single technical or organisational approach can be applied for the establishment of common European data spaces, [and] it is not possible to come up with a centralised governance model for data sharing.”
    2. “Each sector and thematic domain has its own specificity in terms of data types, data flows, business models and stakeholder needs. Therefore, a community-based approach through co-creation and co-design of data spaces… is the only feasible way forward that would ensure buy-in by a broad spectrum of stakeholders. Similarly, from a technical perspective, a single architecture or stack of technologies and standards cannot be universally applied.”

Closer to home, the UK’s Chartered Insurance Institute published Insurance, technology and data: Trust through a regulatory lens. It comes from the pen of Shân M. Millie, whose company, Bright Blue Hare, is “a purposefully-micro venture focused exclusively on human-scale interventions and support for leaders, teams and firms to ask the right questions, and find some of the right answers, for Tech/Data-enabled Value Generation in the 2020s.” Like the EC document, Ms Millie’s report also draws two summary conclusions:

    1. “Tune in to civil society organisations (CSOs). Consumerists, lived experience experts and other civil society activists represent the true voice of the consumer and the barometer of trust.”
    2. “Be a critical thinker on technology and data. Much of the so-called ‘analysis’ relating to insurance is hyperbolic, contradictory, partial and/or undiluted marketing. Therefore, it is important to be cautious, especially for those new or inexperienced in this area.”

Rather than “undiluted marketing”, I intend Data Diary to be a helpful service. For example, you can now cross two lengthy reports off your reading list!

Client focus: Skyrisks Limited

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