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Technology is changing the culture of the London market

These are exciting times for Charles Taylor InsureTech. The firm’s Tide technology is being used by the London Market Delegated Authority Submission, Access and Transformation Solution (DA SATS) initiative, which has been up and running for just over two months. The feedback, according to Jason Sahota, CEO of Charles Taylor InsureTech, has been overwhelmingly positive.

By the time the DA SATS went live in September, exactly a year after Charles Taylor InsureTech was awarded the contract by the London Market Group, half of all the underwriting and broking businesses that focus on delegated authority business had signed up for the service, including four of the five largest managing agents in the Lloyd’s market.

Since then, the percentage of companies in the market taking up the system has continued to climb – Sahota says the figure is now just over 60%. The market-wide contract means around 60 Lloyd’s managing agents, 250 brokers and 3,500 cover holders will potentially use the service. But while the goal is for the entire market place to utilise the system, no specific date or targets have been set.

The approach taken by Charles Taylor InsureTech – together with the market organisations overseeing the implementation of DA SATS – was to make the system so easy and compelling that companies in the market would feel at a disadvantage if they were not making use of it, Sahota says. He is confident many more companies with delegated authority business will adopt DA SATS, as the market transitions into 2019, given the pressures of ensuring their administration systems are all set up and in good order for the new financial year. 

“That is just the way the market works. So, even if companies onboard the system a bit later, say in March or April next year, they will look to bring in their trading and financial data for January or February, because they will want to have a complete, clean year of data on the system for their trading partners and other stakeholders as they exit 2019,” Sahota says.  

A lot of companies, he says, are also under pressure to onboard the system now to better prepare for the uncertainty and volatility associated with developments such as Brexit, which they will have to deal with in 2019.

In addition, a lot of the binding authority arrangements in the marketplace are operated on a subscription basis, with a lead and several following underwriters, which, in itself, creates a certain measure of peer group pressure, he notes. “If the lead underwriters put their binders into the system, but some of the followers don’t, by definition, the followers’ data will also go on which then encourages them to establish a fuller, more interactive presence on the system.”

Sahota puts the success, to date, of DA SATS down to the high level of automation built into the system. Indeed, one of the major challenges faced by market-wide technology projects in the London market in the past, the clear majority of which failed, was how to educate the user base.

“When we designed the Tide technology, we decided to include a real-time, hand-holding capability so that anybody familiar with the way in which delegated authority arrangements work, can pretty much use the system straight away,” he says. 

“When you get a new version of a Microsoft software product, you don’t have to retrain because it is so intuitive to use if you are familiar with the previous version. You simply learn to use the new version of the software by using it.”

The philosophy behind the Tide technology, he says, is similar. “If you wanted to off load a bordereau onto the system, irrespective of its original formatting, you just drag and drop it into the system. It takes, literally, three clicks. The second thing is the knowledge base which is built directly into the system and which uses all the latest technology, including Artificial Intelligence (AI) and pop-up messages and menus.

“So, as you carry out a task on the system, it is telling you, on a real-time basis, what you need to do next. For example, to onboard a contract, takes about 20 minutes when you do it for the first time. Once you have done it for 20 minutes, the process is reduced to three clicks.”

Charles Taylor InsureTech’s recent successes, including the DA SATS win, comes on the back of an increasing demand for new technology solutions in the insurance sector. It also comes at a time of change within the Charles Taylor Group, which saw a 95% drop in statutory profits in the first six months of this year to £200,000, compared with £4.8m over the same period last year.

The reduced result was largely due to the £2.4m cost of relocating the group’s three London offices to one location in the City. The move is intended to create more synergy between the group’s insurance management, adjusting and insurance support divisions to be more responsive to clients’ needs. This is as a result of the changes in the insurance market and, in particular, the challenges faced by the market on the compliance, transaction processing and operational efficiency fronts.

There is very much the belief within the group that the success of Charles Taylor InsureTech is the result of the early investment made by the group based on what it perceived to be the London Market’s need for a different set of technologies, given the pressure on insurers and brokers to provide their clients with new kinds of insurance covers. But where they also must report on their business activities to the regulatory authorities and other stakeholders in a different way.

Charles Taylor InsureTech, which was established in April 2016 to capitalise on the potential of big data and analytics, has expanded significantly over the past two-and-a-half years. Half of the company’s business is focused on commercial specialty and wholesale business and the other half is focused on life and health, pensions and personal lines business. It currently employs around 500 people, 180 of whom are based in the London Market, and operates from three main hub locations in London, Buenos Aires and Mexico City.

The central importance of Charles Taylor InsureTech to the future of the group was amply demonstrated in May, when the company acquired Inworx, a Latin American insurance-focused technology consultancy and software provider for $50.5m. The Inworx acquisition, one of the largest made by the Charles Taylor Group, transformed Charles Taylor InsureTech into Latin America’s largest insurance technology consultancy.

In October, the company also acquired a majority stake in CoVi Analytics, a company that uses artificial intelligence to automate risk and compliance management for insurance organisations.

The company operates according to four core principles: it only focuses on the insurance industry; it either owns, or has a significant investment in, the underlying technology which powers the company’s solutions; it only implements and supports its own technology; and it is as focused on facilitating and supporting business transformation and change within an insurance business as it is with providing a technological solution.

This business transformation and change capability is particularly important for Sahota. “Often our clients are not only bringing in new technology, they are also changing the way they operate, how they organise themselves and how they address risks and compliance issues across the new processes. It is also about ensuring that they are implementing best process when they quote and bind or manage claims on the new systems to differentiate themselves from the competition.”

New roles
He says new roles are being created in the London Market because of these changes. “We are also seeing the emergence of new committees and governance structures which bring together technology and data systems across the business and its stakeholders. The embedding and enabling of newer technologies in the market are, for the first time, bringing all of those worlds together.”

The UK, Northern Europe and Latin America are currently Charles Taylor InsureTech’s main markets. The idea, Sahota says, is to expand organically in its existing markets. However, the company is looking to expand its presence in the US, Asia and the Middle East over the next three to five years because the Charles Taylor Group already has a presence in those markets. He is very clear about the respective roles of organic growth versus M&A activity in the growth of Charles Taylor InsureTech over the next three to five years. 

“If you look at all the acquisitions that we have done to date, the fundamental focus has been around the acquisition of intellectual property rights. Our strategy is to either own outright or to have a significant investment in the technologies that underlie our business. Our investment in technology IP is bigger than all of the many acquisitions that we have made over the last few years.”

He points out, however, that M&A is not the only way in in which Charles Taylor InsureTech acquires ownership of technology. “A good proportion of the technology that we own today, we have developed from scratch ourselves. We will also resort to more M&A activity if it provides us with an opportunity that helps us grow in a new geography. But, of course, it is equally important that the acquisition creates value and is aligned with our strategy and our culture.”

Article published by Insurance Day - 5th December 2018