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Digital Risk Transfers in Insurance & Reinsurance: Time to Act – but Act Smart

It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change, that lives within the means available and works cooperatively against common threats.

Charles Darwin

 

In recent weeks, due to social isolation measures, we have seen proof that even our largest, most conservative clients can quickly pivot and adopt new technological advancements to improve the sustainability of their business, and enable a suddenly remote workforce.

So why do so many organizations in the insurance/reinsurance business still rely on outdated core systems?

Why do underwriters, ceding teams, MGA/MGUs, and reinsurers still rely on woefully inadequate shared folders, emails, Excel or PowerPoint workarounds instead of industry-tailored solutions? Why has so much money been wasted on failed (re)insurance risk transfer platforms?

Turns out the problems are evident, but they persist because we have not been listening to end users.

It all goes back to the user experience revolution

Ideas like Usability and Interface have yet to sweep through the (re)insurance world, and the hundreds of industry folks we’ve spoken with agree.

What we need now is what Bill Gates, Steve Jobs, and the other tech pioneers did back in the 80s. They were on a mission to make technology more usable. They popularized new concepts like windows and icons and the mouse. Eventually came the revolutionary iPhone with its convenience and a bigger touch screen that could support a wider range of human activities.

There is a deeper meaning to the “Less is More” design philosophy they popularized. Companies like Google, Facebook or Netflix have each changed what users expect from technology in their respective categories. Tech companies are building simpler experiences, because they tailored their solutions to user experiences. 

Today, organizations that succeed are ones that listen, understand, and anticipate human needs.

In insurance and reinsurance, we believe that the true revolution in the years to come will have little to do with AI, blockchain, big data and the pursuits of all those other shiny objects that too many investors and innovation leads rave about. Those technologies, while important and useful, will fade under the hood of smart User Interfaces designed for people.

I have spent the last 20 years adapting new technology to the real world, transforming organizations as a BCG and Deloitte consultant, a technology executive, and a serial entrepreneur. In that time, I have not seen one successful venture or transformation project that starts with the technology and seeks to adapt users to it. Success is much more likely when you start with the goal in front of you rather than in the rearview mirror. That goal is Usage and User Engagement.

The pandemic crisis we are currently in is a perfect example of what is at stake. Everyone has come to rely not just on technology, but on usable technology. Would you be using Netflix or Microsoft Teams if they were designed like insurance applications, instead of well-designed solutions to life circumstances? Did they have to be forced on you, top-down and with usage penalties? Or did you embrace them because they made your life easier?

What does that mean in practice?

We are still learning. Insurtech entrepreneurs get really excited by automation. You can’t blame us. This is the change agent, the secret weapon, the Lego block of most software innovation. But take it one step too far, and soon you will have alienated your users with a hyped but clunky product that does not do the job.

A 2006 presentation called “Unfulfilled Promises : Why IT Failed to Transform the UK Reinsurance Industry” (co-authored by Michael J. Jacobides of the London Business School and an advisor to the previous venture I successfully launched) highlighted the fact that reinsurance and large commercial/specialty insurance placements were the outcome of complex processes, and hyping simplistic or over-engineered solutions to take the humans out of the equation was a recipe for failure.

Relay was deliberately conceived to avoid those pitfalls, and make the job of transferring risk more intuitive, and thus faster and safer. We invested in figuring out what key functions could be handled by processors, and which one were best left to people. We knew risk transfers needed to get better, thanks to our research and industry discussions with hundreds of insurance and reinsurance practitioners. We just weren’t sure exactly how. So we reviewed previous attempts at solutions, and engaged with users some more.

And then we got it.

The issue was not a single, simple step in the process. It was not price discovery, or matchmaking demand and supply, or digitizing the resulting contract. It wasn’t capturing information.

It was all of the above, and the gaps between them. It was about Connectivity. Between people. Between systems. And between People and Systems.

There are so many steps that coordinating and keeping track of the whole thing is a giant pain and a central source of inefficiencies. Connecting well, interfacing well and effectively, is the hardest part.

So, we built a great product and designed a great interface. We gave it to users, refined it, and added functions to it. We made it easy to capture and share documents, extract key information from it from multiple formats, request quotes, receive notifications and reminders. We integrated it with email, spreadsheets, acrobat files, and made it quick to tie it into other systems. We made it so users can reach out to any capacity provider, without forcing them to open an account. 

And we built it so we could innovate faster, and keep improving our support for collaboration, the secret weapon of Evolution according to Darwin.

What’s next?

We can help connect the market to insurance capacity right now. The market is asking for it, given what is happening everywhere, and especially in London and New York.

There has been a strong call for digitization in the reinsurance world. Here is the freshest example, among others: https://www.artemis.bm/news/lloyds-in-2019-underwriting-loss-as-covid-19-shows-in-solvency-measure/

“The key to Lloyd’s future now lies in how it adapts to remote operations and whether it can sustain business as usual through key renewal cycles.

Of course, this also gives the Lloyd’s market a chance to evaluate the importance of an expensive base and a physical trading floor. If business as usual continues, despite the shuttering of the marketplace, it has to make you wonder whether some kind of virtualisation of the Lloyd’s model could be more profitable for the market in time.”

We launched our Facultative placement solution in March. “Fac” placements are on the rise again, and we want them to be fast and easy. 

This week, we are expanding to support layered insurance placements for brokers and MGA-MGUs seeking insurance capacity, for primary and excess.

In a few weeks, we will launch our reinsurance broker functionality.

In a few months, programs and treaty.

We are just getting started, and we could help each other.

To help you in these changing times, we also made it a snap to sign up. It’s free to start and try everything, and you get to keep a free account to structure risk transfers even after the trial period.

Whether you are a broker, an MGA/MGU, a captive, an underwriter, a reinsurance cedent or broker, or a reinsurer, sign-up at www.relayplatform.com (the sign up button is in the top right corner), test-drive our interface, and give us feedback by email at [email protected]

Go ahead. Try it at home right now ?

In return for valuable feedback and to help you get used to better ways of doing business during this pandemic, we will even double your trial period upon request.