Lloyd’s Blueprint One has set out a series of deliverables to improve the competitiveness and efficiency of the world’s oldest Insurance exchange.
It is interesting to reflect on the fact that Lloyd’s now describe their future operating model as being an ecosystem ‘’The Lloyd’s ecosystem will be the global marketplace to buy and sell insurance’’ and I think that is a topic worthy of further analysis.
There are 2 overlays that can be associated with the definition of an ecosystem as an Insurance operating model:
Lines of business as ecosystems e.g. Marine, D&O etc.
This definition can be applied to today’s Insurance marketplace but is being challenged by environmental technology developments such as IoT, Remote Surveillance applications and Autonomous vehicles significantly changing and in some cases transforming the traditional definition and nature of risk.
There are examples now of organisations having much better internal views of their risk than before which is leading them to move to purchasing very different Insurance products or indeed no insurance at all. In the end could these advances in information availability and customer owned risk analysis lead to an Aral Sea event for the industry with a significantly shrinking risk pool?
Customer Propositions as ecosystems – Where there is much current use of this term.
Technology innovation is changing the way in which we can now think about the development of risk related propositions with 3 principal enablers:
- Cloud computing and the associated ability to access large amounts of data driving the term data lake to data ocean!
- API’s and micro-services as a means of doing business
- 5G and hyper-connectivity
This could lead to customer facing organisations building propositions where a combination of organisations collaborate to provide a service or product. This may not be a pure risk transfer product but could include much higher levels of on-going services interaction with the customer.
So what does Blueprint One bring?
The first and sixth of the 6 proposed releases as part of Blueprint One - The proposed redevelopment of the current PPL platform to become ‘’ Over time, …. a data-first platform’’. and the development of a Lloyd’s ‘’Services hub’’ is an opportunity to rethink how the current players in the ecosystem interact and is potentially the area where the greatest innovation in the Lloyd’s operating model can be delivered. The key to delivering this will be a real cross-market understanding of data and a clear understanding of how it drives risk assessment and proposition development.
The second proposed release ‘’ Lloyd’s Risk Exchange’’ has the opportunity to take the lead from the high degree of automation in placing business that has already been delivered in the high volume personal lines and SME commercial sectors over the past few years. This could arguably be the means by which the existing supply chain view of the insurance ecosystem is made more efficient enabling Lloyd’s to remain competitive in the short to medium term as technology impacts the ‘real world’ in which insurance risks arise.
The technology enabled customers of today and tomorrow will demand the construction of a proposition at the point of consumer interaction – enabling Lloyd’s to move up the value chain by its participants creating a true product of one, the question is which way do Lloyd’s see their future as an ecosystem? – as a more efficient implementation of their current business i.e. ‘digital lipstick on a legacy pig’ or a truly transformational agent of change?