Bermuda’s digital future

Technology has rapidly become an everyday part of our lives. What’s more, its role and importance are only likely to increase as wireless communications and microprocessors make almost everything more efficient and straightforward.

Every insurance practitioner knows that our industry is playing technology catch-up as we strive to address our inefficiencies, and the Bermuda risk market—despite its relative youth —has the chance to become a global leader. The latest technological advances have the potential to transform our market’s role in the global commercial insurance sector.

Bermudian underwriters are already seeing more of the kind of business that previously only reached our island in times of a cyclical capacity crisis, or in some cases didn’t arrive at all. As brokers scour the globe for the best options for their clients, this can only be a boon for Bermuda’s insurers.

However, it creates an enormous challenge for carriers with limited human resource in a compact and costly operating environment. Many are already struggling to filter the new flow of business and uncover the occasional risk that hits their sweet spot. The sheer volume of presentations these carriers receive can often be an insurmountable task, so many attractive new opportunities are simply missed.

Technology provides the answer. Newly developed systems allow a broker to accurately match the business they have on offer with an individual risk carrier’s appetite for a specific type of risk, and deliver it to them directly, electronically, for their review. That in turn gives underwriters the ability to focus their energies on business they have not seen before without sifting through a pile of irrelevant presentations on paper.

Thanks to technology, brokers can place selected, appropriate business at the top of the electronic pile for those underwriters that are likely to appreciate an opportunity to quote. Almost as a bonus, such systems speed up the entire process and allow submissions to be presented to underwriters in a homogenous and systems-compatible format.

Revolutionary trading

But that’s just the first stage of the impending Bermudian insurance technology revolution. Trading exchanges in other parts of the financial services sector first evolved from open-outcry pit trading to hybrid systems where technology supported trades. In their final step forward, many became fully electronic. I see that possibility in certain segments of the insurance sector, which outside of personal lines has not yet passed the hybrid stage. This potential presents two significant opportunities for Bermuda to move to the top of the world’s insurance efficiency rankings.

First, we are now able to use application program interfaces (APIs) to push basic risk data about relevant risks—already digitised at the broker’s end—directly into an underwriter’s own office and onto their underwriting systems. This dramatically reduces carriers’ value-destroying data entry time, and therefore frees them to focus on risk selection, underwriting, and client services. Meanwhile they are relieved of the slush pile of off-the-mark submissions. We are currently working with selected clients and Bermuda markets to implement such connections and feed data to underwriters as they need it. They are already seeing improvements in speed of access, efficiency, and their ability to do more business.

Second, and over a slightly longer term, we see the visionary potential to create digital underwriting boxes which mimic the physicality of Lloyd’s in London. Using such a system, submissions will flow directly from producing US brokers through the wholesale broking platform into the virtual boxes selected, allowing rapid underwriting decision-making and the swift return of multiple quotations to the relevant originating broker. Such eased distribution marks a great leap towards the type of fully digital risk exchange that would bring our market out of catch-up and into the trading efficiencies enjoyed by our counterparts in other areas of banking and finance.

Our company has already universally deployed TradEd, a one-stop, proprietary digital processing platform, for all transactions we handle. It collects data from retail brokers to be distributed fluidly to insurers in the form of an electronic policy slip. The process removes the need for carriers to re-key risk information, allowing the market to trade data, not documents.

Where their systems are not instantly compatible, Ed creates bespoke APIs which serve as a permanent extension of the carrier’s own and enable them to trade electronically.

Connected originating brokers then have direct access to relevant specialty carriers. Meanwhile the system harvests complex, granular data about risks and markets, while allowing carriers to reduce their costs. That’s wholesale broking redefined.

Such initiatives introduce real new operational efficiencies to the process of bringing business to Bermuda. Ed has embraced them as the future. They will increase the value of each premium dollar delivered relative to conventional trading. Particularly in the current hardening market, that must be attractive to all.

Chris Bonard is the chief executive officer of Ed Broking—Bermuda. He can be contacted at: chris.bonard@edbroking.com