Jun 3, 2013 1
Balancing different commercial agendas between intermediaries and carriers will always make working together to achieve win-win terms a challenge. Understanding and allowing your counterpart’s business objectives and limitations to influence your negotiations can, in turn, be used to drive your own objectives. What else enables an easy profitable and efficient working relationship? Here are a few things that have been brought to my attention…
1. Info exchange
Supporting information of the appropriate detail, length or format is still top of underwriters’ agendas. The London Market Group is enabling this process to be more uniform as part of the Market Reform Contract (MRC) to support broker and underwriter information sharing. Here’s what they say about the standard form of submissions, in their own words:
‘It offers a clear structure and means that brokers present contracts in a consistent manner. This in turn adds clarity to the broker/underwriter discussion and thus enhances the efficiency of the placing process… ensuring the content was aligned with the needs of contract certainty.’
Too little or messy information makes a valid underwriting judgement harder to achieve as well as increasing the risk of non-disclosure of material fact. On top of that reducing requests for further information, drawing out the process, benefits both parties.
Carrier service improved
Regular face-to-face meetings or phone calls, I’m told, are still the best way of maintaining good service levels and ensuring your incoming broker proposals are actually the business you write. That and up to date appetite lists are expected but not always delivered. The real benefit in maintaining these standards is the time freed up for carrier admin teams – when they are not wading through and logging unnecessary emails and proposals they can provide more support elsewhere.
2. ACORD know how
At the April ACORD club, presentations were made by messaging champions from ACE, ACORD, Lloyd’s and Morning Data. They outlined the need for the market to improve the electronic exchange of structured data between brokers and underwriters. The best way for the market to do this? Full engagement from underwriters AND brokers with ACORD standard messaging.
Lloyd’s commissioned a proof of concept for messaging with the LMA (London Market Association) for their MRC (Market Reform Contract). Despite Lloyd’s working with a software provider and a number of brokers to develop a prototype, (North American Property MRC, Marine MRC and a MRCE), and it being established it could be successfully used in practice – the London Market Modernisation Activity report states there needs to be a market ‘pull’ and greater broker appetite for further investment.
Benefits of ACORD standard messaging:
- Structured ACORD compliant data is automatically produced
- The broker’s output is a PDF or Word version and an XML file containing the data
- Human error is eliminated as broker and underwriter systems communicate directly
- Time is saved on both sides by preventing the need for re-keying
- If the broker changes any of the details, the underlying data will be updated and reflected in a new version
3. Market initiatives?
The commercially dynamic nature of the market brings huge advantages from free competition, diversity and innovation but is a major disadvantage when trying to address areas of common carrier and broker interest i.e. efficient collaboration.
Higher transactional costs come from DIY local methods of working which are continually resorted to after the failure of what is supposed to be ‘The Next Big Thing’. For example the “Darwin’s” “EPS’s” and “Blue Mountain’s” that inevitably make businesses sceptical about what truly is innovation and what is an expensive idea lacking in long term benefit or buy-in.
4. Solution to ‘sticking plaster’ systems
Poor systems selection based on historic requirements rather than future needs and poor systems integration with legacy systems are top pitfalls to avoid for future broker/ underwriter communication quality. Being blindsided by one new feature when the system doesn’t have the ability to support new distribution channels traps companies in the past –making it difficult to switch capital to new products, lines or geographies to ‘balance the books’ and create profit.
Attempts to expand into new classes or creating new or different products often result in ‘sticking plaster’ systems.
If you look at the retail industry, for example, those who remain profitable are forward looking with highly integrated systems strategies with flexible distribution channels to market. Those who have failed to bring together all of the operational and technology threads and ignore future channels are ending up with the liquidator.
Replicating a retail model for insurance would mean a fully integrated system that handles delegated authority, subscription and remote web-based products through an integrated broker portal.
This would make document, communications and policy details accessible for carriers and brokers to refer to, preventing unnecessary disputes and slowing of work. Reduced data transit time means more time to underwrite and broke deals. The other benefit is all downstream activities premiums, claims and accounts are joined up in straight through processing.
5. Doorstep advantage
From what I’ve experienced the ease of socialising with people in the London Market is taken as a given. Whether you started out with a stamp on the trading floor or have grown used to the culture sliding over from another industry, the proximity, as we all know, is a unique competitive feature.
London Market locality, however, increases the competition on your doorstep as well as your opportunity to take advantage of it. Are you making the most of networking with NEW people? Introducing yourself to people outside of your existing outlook contacts? I’m pretty new to insurance, so I want to translate face-to-face opportunities into potential long term commercial relationships/friendships.
My new goal? To follow up introductions more effectively off and online. For example, that interesting conversation I had with X at BIBA results in them as a new LinkedIn connection, someone I listen to on Twitter, invite to events and maybe, just maybe, them remembering Sabrefish when they need a new eInsurance system…
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