InsurTalk: Digitalisation of underwriting at Lloyd’s – suicide mission or lifesaver with Dave Connors, Founder and CEO at distriBind

Delegated authority holds great significance within the London Market, serving as a cornerstone in the landscape of risk underwriting. Data control is crucial in this area, espiecially considering data cleansing, data transformation in real-time and reconciliation.

In this episode of IT Insights InsurTalk, together with Dave Connors, Founder and CEO of distriBind, we discuss the role of the delegated authority in the Insurance market, with a special focus on data.

Ewa Banaś: IT Insights InsurTalk: interviews with insurance leaders about what matters to the industry. Hi, I’m Ewa Banaś. Welcome to another episode of IT Insights InsurTalk, a series by Future Processing. Delegated authority holds great significance within the London Market, serving as a cornerstone in the landscape of risk underwriting. Data control in return is crucial in this area, especially considering data cleansing, data transformation in real time, as well as data reconciliation. Today, together with Dave Connors, founder and CEO of distriBind, we will discuss the role of delegated authority within the insurance market, with a special focus on data. Dave, excited to have you here with me today at Lloyd’s. 

Dave Connors: Hi Ewa, thank you for having me. I’m glad to be here. 

Ewa Banaś: Glad to have you here. Dave, I heard you are a tennis fan. Is there any tennis star that, if you had one chance to see live, you would go to this match no matter what? 

Dave Connors: So, I only really started playing tennis in the last year. I used to watch it a bit more, but I didn’t really get into it until after Federer had retired. So, I would want to go see him when he was at his peak. 

Ewa Banaś: Okay, so I guess your special wish would be a time machine to go see him? 

Dave Connors: I would need it for a lot of reasons, but that would be one point on the bucket list, for sure. 

Ewa Banaś: And how did you actually end up in insurance? 

Dave Connors: Like most people, certainly from my age and older, I fell into it really. Where I grew up in Gloucester – which is a small city in the Southwest of England – there’s really not a lot there apart from insurance and kind of manual labour. I was far too lazy for manual labour, so I chose insurance. 

Ewa Banaś: And how did this route happen? 

Dave Connors: My insurance career really formed of two parts: the “business part,” where I was an insurance technician, did some underwriting, and some claims; and then I started working for a small consultancy. I then moved into business analysis and functional design, working with some vendors. Throughout that, I’d done a lot of work in delegated authority and outwards reinsurance. I saw firsthand the problems of the reliance on spreadsheets, poor data exchange, and poor data visibility. People or insurers weren’t sure what they were on risk for, and there were arguments over claims and commissions. I felt that was a problem that had never been solved because existing approaches were coming at it from the wrong tack. I felt my perspective of seeing it from both the business and the tech side was a relatively unique experience, providing a different insight. I reached the point where I thought I could forgive myself if I tried and failed, but I couldn’t forgive myself if I didn’t try. 

Ewa Banaś: It’s better to regret trying than not trying. 

Dave Connors: Exactly that. Nothing out there seemed to be touching it in the right way. 

Ewa Banaś: Thank you for this introduction and background. How important is delegated authority within the London Market? 

Dave Connors: It’s crucial. Within Lloyd’s in particular, a little over 40% of the overall market gross premium is written under delegated authority. In the broader London Market, it’s probably similar. One thing I often say that annoys people is that delegated authority is more important to Lloyd’s than Lloyd’s is to delegated authority. If you look at global delegated authority premium, it’s huge; for example, the market for program business in the US is nearly a hundred billion dollars. You cannot be externalising a particular data standard outside of this market; there need to be more efficient models of data exchange. 

Ewa Banaś: You already mentioned your history and how it all began with distriBind. How did the process actually look five years ago? 

Dave Connors: It’s probably similar to how it looks today, unfortunately. It is very heavily reliant on a spreadsheet sent at the end of every month or quarter. Typically, an MGA will sell the insurance policy, and a week or two into the next month, they will send their brokers the list of all policies sold in the previous month. The broker then sends that to the insurer. There might be three separate spreadsheets for policies, premiums, and claims. These spreadsheets, called bordereaux, can be hundreds of columns wide and have thousands of rows. For an insurer to see the connection between a policy sold in January and amended in October is very difficult. It’s a very slow, manual process. 

Ewa Banaś: The volumes of data are enormous. How important are data standards in delegated authority? 

Dave Connors: I’m probably the worst person to ask, because I genuinely believe that the attempt to enforce a common data standard is one of the things that has held progress back. Too often, there’s a focus on the semantics of headers rather than looking at the structure of insurance. I use the analogy of a biplane and a jumbo jet versus a mouse and a whale. The mouse and whale are more similar because they share the same mammalian skeleton structure. You cannot take a biplane and scale it up to a jumbo jet. The Lloyd’s market often tries to build a market-wide solution by determining a standard for a specific territory – usually North American property – and then they try to bolt extra bits on until they hit a dead end and start again. What is needed is the flexibility to understand that it’s the structure that matters. I believe in internal standards – within Lloyd’s we should know what things are – but the externalisation of that standard to US MGAs or brokers is the problem. 

Ewa Banaś: That’s an interesting take. 

Dave Connors: I’m in a small minority in that belief. I’ve had conversations with insurers who spent 18 months trying to enforce a particular spreadsheet on MGAs, only to find the MGAs just sent what their systems could produce anyway. The insurer then had to manually manipulate the data. What’s needed is a flexible tool that can receive whatever the sender needs to send and turn it into what the receiver wants, whether that’s transformation or enrichment. The London Market is the only example I can think of that has used tech as a barrier rather than an enabler. In banking, with PSD2, you can see accounts from different banks in one app. The London Market has used standards to say, “if you can’t send it this way, you can’t do business here.” 

Ewa Banaś: What are the challenges in data specific to delegated authority?

Dave Connors: The main challenge is the understanding of just how different everything is. At the MGA level, you have huge global tech MGAs and new InsurTechs, but also older, smaller ones where everything is manual or even handwritten. On the carrier side, you have modern digital platforms alongside legacy “green screen” systems. Taking all these different data sources and sending them to different recipients is the biggest challenge. We need the flexibility to not use tech as a barrier. While real-time API would be wonderful, there are many reasons it won’t happen everywhere. We need a process that allows for different formats – spreadsheets, PDFs, XML – to go out via API or other forms. We must recognise the disparity in tech sophistication but focus on what matters: is it the right quality of business and will it make an underwriting profit?

Ewa Banaś: Where would you put delegated authority in the context of Blueprint 2?

Dave Connors: It’s a crucial part, but I have my doubts about the approach. There needs to be an internal standard and repository, but Lloyd’s needs to be more open-minded and get past the obsession with externalising their own standard.

Ewa Banaś: Dave, we’ve been through the past and present. What’s the future? What’s the “art of the possible”?

Dave Connors: It will become closer to real-time transactional API, but there won’t be a “big bang.” An insurer isn’t going to get rid of good business just because an MGA isn’t tech-sophisticated. If they can’t do it through Lloyd’s, they’ll just move it to non-Lloyd’s paper. Similarly, insurers aren’t going to suddenly switch off legacy systems; some 50-year-old mainframes are still running. It will be a curve rather than a switch-off. It will move towards digital and real-time over a horizon of 5, 10, or 15 years.

Ewa Banaś: It always takes time, but flexibility matters.

Dave Connors: Exactly. It’s about harmonising a process without forcing everyone to move at the same speed. Having flexible tools will be the key to success.

Ewa Banaś: Thank you, Dave, for sharing your stories and insights with us today. And thank you to our audience for listening to another episode of IT Insights InsurTalk. See you next time.