Insurance market lloyds of london, once a bastion of pinstripes, in-person trading and liquid lunches, is joining thedigital natives. first there was the ban on day drinking and a relaxation ofdress codes just the sort of casual, clean living popular on the us west coast. then came the pandemic-driven closure of the underwriting room. now there is ki, the first fully digital lloyds syndicate, which has raised $500m from investors including blackstone.
Ki developed by insurer brit but run as a standalone company says it will use an algorithm-driven approach to evaluate lloyds policies and automatically offer quotes when it launches next year. the traditional, city centre, person-to-person process of writing commercial insurance policies account for 40p cost of every 1 of premium sold. offering a platform for brokers to use, for a fee, should speed up the process and cut expenses.
Lower overheads could help lloyds attract new business. it reported a 400m loss in the first half of the year, down from a2.3bn profit the previous year, following a rush of coronavirus-related claims. the combined ratio expenses plus claims, as a share of premiums climbed above 110 per cent meaning insurers made no profit from underwriting.
But insurance pricing is complex and unpredictable. for all kis talk of data science it has not set its sights on lead underwriting.
The future of lloyds may be a hybrid working process in which digital underwriting is used for straightforward policies and insurers following a lead, while complex, bespoke propositions by lead underwriters are negotiated in person.
Kis entrance is less dramatic than it might have been pre-pandemic. shutdowns forced the use of an electronic system that had been rejected by insurers and brokers. scratches signatures have been replaced with digital contracts. still, the worlds largest insurance marketexpects thousands of people to return to the underwriting room next month. ties and boozy lunches may be out but face-to-face trades are not going anywhere.
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