The Future at Lloyd’s is bright, but only if good data is allowed to shine

Nick Mair, DQPro’s co-Founder and CEO, asks about the data quality incentives in Blueprint One, and how the market will implement data standards to make for a bright  Future at Lloyd’s 

Data hygiene is what we do at DQPro, so the quality of data is front of mind for me when assessing the Blueprint One paper and its recently published implementation plan for the Future at Lloyd’s.

Blueprint One sets out an ambitious wish list, ultimately looking at driving a more efficient streamlined market. Data quality is the bedrock of this ambition, and therein lies the nub. 

No carrier in the commercial and specialty insurance market can be 100% confident about the quality of their data. This is not their fault; rather it is because of the way the market works. 

Commercial insurance can have long distribution chains, providing ample opportunity for data to lose granularity along the way. Lloyd’s is a syndicated market, and like most London market business, heavily reliant on the brokers to bring good data to the underwriter.

Data streams into the market

No matter how discerning the underwriter, it is usually the case that the data – which ultimately impacts the carrier’s expense ratio – comes first from the insured and then through their broker. It is the broker community therefore, who is largely responsible for underwriters’ data granularity.

Lloyd’s has said it wants data “right first time”. Before brokers can play in their new platforms, they must first commit to providing good data, in the correct format. That is positive in many  ways, because it pushes the data quality issue upstream to brokers, which are often the source of data as it trickles through the market, where data quality has until now primarily been the carrier’s problem.

However, it still needs to be easy to place business into the market. And Lloyd’s, for all its bold statements, has no mandate to tell the intermediaries what to do, but it can penalise those who don’t play ball.

Carrots, not sticks

However, rather than penalise, what if Lloyd’s provided some added incentive? At present, market participants pay a messaging charge to participate, brokers included. That charge could be reduced if a player is providing accurate data, reliably, in the right way to the right platforms.

Such an incentive should be made clear to brokers. The better the data, the more confident the underwriter, the better the potential pricing the client can receive when looking to transfer risk to the carrier. That’s a matter for brokers to explain to their clients and for their own benefit.

Standards that apply for everyone

The other point is about data standards. Lloyd’s recently issued a progress update to Blueprint One, including the Services Hub, which includes a priority to launch a standards and accreditation pilot, one among many pilot schemes getting underway. We need more progress on this, and, so far, the insurance industry has not been good at this.

Much more can be done to set standards, so that data entered at the top of the chain should emerge at the bottom of the chain in the same standard format. At present ACORD is still our best answer, but it has at best been applied in a limited way within the Lloyd’s specialty market. The messaging standard was conspicuous by its absence in Blueprint One. That needs clarifying, perhaps in relation to any new standards and accreditation pilot.

Data quirks abound

The basic messaging is in place, but there is plenty of free text and manuscripting that permeates the system, particularly for the quirks and curves of the more complicated and niche specialty classes of business. The best analogy for this is that it is like trying to force an analogue signal into digital format.

This is an important component, but it is not the whole answer for data quality. It doesn’t answer whether data is accurate, timely or consistent. Standards are about the format – the container within which data is sent – but they’re not great for measuring the qualitative aspects of that data.

The key point is that it’s a recipe for disaster if you don’t have a consistent standard for data and checking data across the chain. 

Both the issues of incentivising a ‘right first time’ data culture and true data standardisation are  going to require intelligence solutions, and we are engaging with Lloyd’s to talk about this. We welcome the thoughts and engagement of the market too – what do you think? Do get in touch or leave a comment.