According to Xchanging, a London-based business processing, procurement and technology services provider to the global insurance market, electronic placing platforms have the capability to integrate document collaboration tools enabling carriers and brokers to more easily review and make changes to the same digital document, such as a claim. Beneficial to carriers, agents and claims personnel, a complete digital trail is maintained while reducing the effort and error in maintaining data and the risk of lost physical file documentation. Max Pell, managing director of Xchanging, describes the need for electronic placing platforms and how soon the insurance industry could see their implementation.
- In general, what are electronic placing platforms?
There are e-placing platforms, which support the current processes for placing insurance risks around the world, primarily in large property & casualty and reinsurance, and there are e-trading platforms where capital capacity and risks are traded and these are much more disruptive to the current process that is being followed by the industry.
- How do electronic placing platforms benefit the industry?
E-placing platforms have a number of benefits including maximizing IT budgets, document collaboration, low risk and adoption cost, reducing effort and errors in maintaining data, minimizing the burden placed on administrative staff, and allowing current broker or carrier systems to remain in place. To delve into these benefits more specifically, take document collaboration for example. Documents are emailed between brokers, underwriters and end customers constantly so it is very difficult to keep track of the latest version and what changes have been made, accepted or rejected by the broker. Electronic document collaboration can create an entire audit trail of each document and a single version of truth for all parties involved, removing process inefficiencies.
- Why are they needed now more than ever before?
There are and always will be gaps, with many upgrades to existing systems ongoing and new initiatives being launched to meet the needs of insurers and brokers as they operate in the increasingly diverse locations the insurance markets extend to. Therefore, the most pressing need the industry is facing today is to have operational systems in place that are capable of successfully underpinning these branches of insurers and brokers in all new locations. Outside London, processes can be dysfunctional, particularly for accounting and settlement. Now is the time to address the cost efficiencies of the market and strive for a single set of global standards through technology like e-placing platforms.
- Why have they failed up until now?
There has been a long history of failed attempts at developing and implementing e-placing platforms in the U.S. and UK. Efforts have failed primarily because people have tried to tackle too much and required too much cultural change too quickly. For an industry that is typically wary of large overhauls, there was understandably resistance by practitioners who would be the users of the platform.
- How do you think the industry can overcome these challenges?
A few measures need to be taken in order for the industry to feel more comfortable in adopting this technology. First and foremost, the business imperative needs to be clearly spelled out. This technology is a utility that can be leveraged to ensure the global market is on the same page when placing risks. We have heard feedback from our clients across the board that they are in need of global utilities that perform functions like an e-placing platform. Secondly, cultural change needs to happen in gradual steps and the technology must be designed in a way that does not require too much cultural change to occur too quickly. Upsetting the apple cart is not wise when dealing with a conservative industry. Lastly, we can demonstrate the value of this technology by drawing examples from other industries that have taken inefficient processes, applied technology and saw strong results.
- Do you foresee any other challenges inhibiting uptake?
Designing the technology in the first place will be challenged by the many views people will have on how the platform should operate, how much value should be expected immediately and what rules and standards will be written into the operation of the platform.
The second challenge will be simply getting brokers and insurers on the platform. The market will be quite resistant as we have already discussed so unless there is a major event and companies start losing a lot of money and they need to change their model, the uptake will be slow. Trying to corral the entire industry is hard work. But this will be assisted by demonstrating real value and educating everyone on the business imperative driving the need for this technology.
- Are there electronic placing platforms currently operating in the global insurance landscape?
Xchanging is currently developing a platform that is designed with the aforementioned challenges and solutions in mind. Ultimately, our strategy is to create a number of stand-alone industry, global standard platforms to provide an infrastructure for insurance. We are still in the proof of concept stages where we are collecting feedback, but we will move to a full production scale after gathering that intelligence.
- What has been the industry’s response to the technology?
Theindustry has been uniquely resistant to the technological impact and electronic ways that have affected other industries. Some may learn about this technology and wonder why it would not have already been quickly adopted due to its value, but parts of this industry are still very much grounded in the traditional ways of trading. We have seen technology make inroads in consumer insurance, but not in commercial insurance.
- How do you see this technology advancing in the near future?
It really depends on how quickly the cultural changes occur. I believe it will take about five years for the technology to reach a reasonable scale and adoption rate and then five to ten years for reasonable change to begin to take shape within the industry. But, once this happens, the industry will not go back to the old ways of placing and it will become the new norm.
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