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Today we heard from the #LondonMarketGroup (#LMG), how the #risk landscape is going to change over the next 10 years.

A packed audience, behind closed doors, at the Willis Towers Watson auditorium heard from a panel of distinguished speakers how #underwriting as a discipline could reduce, or even disappear with the introduction of advanced #data and #analytics.

We also heard whilst #AI and #robotics has the potential to reduce the cost base of doing business in what is an expensive market, it will ultimately be people who will lead the #innovation process and ‘design-in’ simplicity for the benefit of the end-customer.

Key points

There are some who point to the specialist business written as an enduring reason the #LondonMarket will remain resilient to #disruption. Delegates heard how this is true, up to a point, but reducing due to #digital automation. One third of the business (and growing) is originated from #coverholders, who in the majority of cases offer a standard – not a specialist offering.

The audience heard how seven out of ten of the most valuable businesses by Market Capitalisation are platform based (Alibaba, Facebook, Apple……) and that a significant portion of this value was driven by intangible, rather than tangible assets. Platforms offer the opportunity for participants to create significant direct and indirect #network effects, reduce cost and turn the aggregation of data into valuable business insights and a superior customer experience.

The audience also heard the risk buyer’s perspective, many of whom face the challenge of not being able to arrange insurance coverage for the risks their businesses face, as the products are simply not available. Dynamic and complex connected #business risks have fundamentally changed the risk profile in ways not envisaged only a few years ago.

What does this mean?

In a nutshell, to survive (and prosper) the London Market needs to be relevant to its customer base.

If the risk profile of insurance buyers is evolving, then the industry needs to innovate and develop products that respond accordingly. The potential to develop innovative products that plug uninsured, or underinsured customers is vast and applies to both mature and emerging markets. For some this points to a different role, distinct from the transactional (risk transfer) relationship, where data & analytics create the opportunity to provide business insights and ultimately advice.

For others, innovation creates the opportunity to provide not only a better service to the end-customer, but also products that are relevant and can respond to intangible risks, including the challenge of maintaining cash-flow following an insurable event.

Beyond the inevitable discussion as to whether the carrier or broker should own high-value touch points that ultimately determine the #customer experience, perhaps there is a more fundamental question to be addressed – how do you innovate the traditional insurance business model?

Tough love

Business Model innovation is perhaps a far more challenging question. It requires the industry to ideate, experiment and ultimately ‘fail fast’ (and preferably at the lowest financial cost).

What distribution model provides a better fit between ecosystem participants and how can the industry create network effects? These concepts, whilst second nature to the large Market Cap platform based businesses, are still largely alien to the insurance industry.

How do you move away from a risk-transfer mechanism, where the product is central, to fundamentally reimagining how business is conducted on a day-to-day basis? Does an industry that has built its reputation on technical competence have the creative capacity to reimagine its very own existence?

If you are to survive – in the words of Jack Welsh – you need to “go for the leap”.


Reciproco provides knowledge integration across risk, solvency and strategy, including digital transformation, leading complex and unique projects in regulated sectors. Helping senior executives and management teams focus on strategic challenges to create a competitive advantage.

Darren Munday is the founder and Managing Director of Reciproco. An experienced executive with over 20 years’ global experience with multinational companies, including Chief Risk Officer reporting to the Board.

Darren is an Honorary Visiting Fellow of the Digital Leadership Research Centre, Cass Business School where he also holds an Executive MBA.  Darren is a Certified Fellow of the Institute of Risk Management (CFIRM) and Chartered Insurance Risk Manager (ACII) of the Chartered Insurance Institute.

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