The challenges of implementing the changes arising from Blueprint Two in the Delegated Authority space are significant. The ultimate ambition to shift the market to a digital eco system will help firms deliver better value at lower cost for their customers, however, as an industry there is much to do to actually make the ambition a reality. Lloyd’s have recognised the challenges for this initiative based on market feedback, choosing to adopt a phased and rolling adoption programme from Q3 2021 and focussing on market business partners who are ready to adopt the platform.
Strategic choices for legacy systems
Lloyd’s are working on the market technology aspects. They are looking to replace legacy solutions, such as Atlas, BAR, DA SATS and AiMS, with new or enhanced systems, which meet the go-forward needs of our industry. Lloyd’s have provided indicative timeframes for a phased approach and some limited guidance to market participants. Many firms are waiting for further clarity from the technical roadmap due to be issued in April before deciding on their Delegated Authority system strategy. Others have decided not to wait and are pursuing technology solutions, which address their current challenges and helps move them forward in their journey. Both approaches are valid in the current environment, as both recognise the enormity of the task ahead. However, what else can firms do to prepare themselves for the journey ahead and get them to a position to embrace the new DA platform that will be available through Lloyd’s?
The need to assess and improve data quality
Accurate and reliable data capture is at the forefront of the challenge and is what both brokers and managing agencies need to concentrate on. The enhanced solutions offered by Lloyd’s will only be as good as the data going into them and the delegated portfolio is known for its challenges with data quality. Steps have been made by Lloyd’s to improve data integrity such as the Coverholder Reporting Standards v5.2 and the Market Business Glossary and they provide a good basis for what to expect from Lloyd’s.
However, key questions remain for many firms:
- Do they have a clear and concise picture of the data provided to them understanding where the challenges of data integration may come from?
- Is there a clear view of the systems they have used to originate the data they consume?
- To what extent does the data received meet coverholder reporting standards?
- Where do firms require additional data to add real value add to underwriting decisions and portfolio analysis?
Key steps for effective collaboration with all parties in the DA eco-system
With these questions in mind, there are 4 considerations, in the data quality journey, needed to make the DA Eco-system a success for both brokers and managing agencies.
- Ensure your firm has been set up to hold a “golden record” for delegated underwriting data. Many firms have multiple data sources due to legacy systems and implementations. The go-forward requirement will be for data to be fed from core systems and therefore you need to be clear on which data source in your systems is the “golden record”.
- “Golden record” data quality. You should undertake a review of the quality of the data you hold as the golden record and answer the following questions. To what extent is it complete? Where do you experience missing records? To what extent do you receive corrections? How aligned is it to the market standard? Does it vary by coverholder, broker and class of business? What are your current challenges with processing the data you receive? This will help you to assess, score and focus on the areas of your DA portfolio, which require further work to meet the expected standards of DDM.
- The “golden record” can be validated ahead of time. Once identified, you can start work on putting in place appropriate validations to ensure the accuracy and completeness of the information received. The coverholder reporting standards are clear and are likely to be supplemented with additional data requirements. Standards will only become more onerous in the future, so your focus needs to be on ensuring your data meets current requirements as a minimum.
- Collaboration is key. All parties across the delegated authority lifecycle are responsible for data quality. Managing Agents need to work with their coverholders and brokers to identify and raise data quality issues and resolve them. As a market we understand where we have come from, and we have a clear vision of where we want to be, we will only be able to achieve the end goal by working in collaboration.
We’re now in a period of transition to a new era of Delegated Authority Management. All market participants must consider how they enhance current operational practices to meet the need of Lloyd’s, as well as improve the quality of data held and shared across the market. Improved data should result in enhanced underwriting decision making which in turn should result in improved underwriting profit.
As a market we know what is coming. During 2022 there will be a full introduction of the Conditions of Trade removing the need for separate submissions to the bureau, the introduction of continuous contracts and a full set of enhanced risk level standards for submission into DDM. As a market we have just over 18 months to make this a reality, with data quality being at the heart of the success of this programme of work. And that’s why data quality shouldn’t just be considered as a Lloyd’s requirement but as a business necessity and core to the success of a firms delegated authority offering.