Innovation vs Tradition

 

 

I could never understand how having an entire generation of insurance professionals faced with the prospect of spending either the start of their career or their entire career in a technical role was useful to the Insurance market? Yes, it may be cost effective but what happens when the reigning generation retires? Who takes over? The market isn’t structured how it was 20 years ago. Unfortunately for most juniors battling for a seat around the insurance table nepotism is widely frowned upon and the days of having doors opened because of your surname are long gone – for most markets anyway.

I recently attended a conference on innovation, which followed by a meeting with a Head of Operations, changed my opinion on this matter. Once it was explained by minds that had perhaps removed themselves from ‘traditional insurance’ it all seemed to make sense.

I will start with the ideology behind Operational departments – these actually aren’t set up to save money. They were created to streamline a process, processes which due to the increase of regulations over recent years are now being properly monitored and Lloyd’s expects consistency across the market. For companies to be able to fulfil Lloyds’ expectations, they can’t have different teams training their assistants in different ways. In short, by creating one central team which offers one particular service for each team means that every person has a similar way of doing things and dramatically increases consistency and efficiency.

This leads me onto innovation, a topic which clearly splits the market in opinion. On one hand you have your traditional old boys who have seen insurance through its ups and downs, on the other you have your revolutionary minds; the artists of the insurance world who have recognised the importance of adapting to change.

Lloyd’s has been around for over 300 years and like black cabs, Underwriters use specialist vehicles to write their risks. Yes the insurance industry has developed in 300 years. It now has quota shares and facilities in place to save time and yes, Lloyd’s remains to be the global hub of insurance, so a level of face to face interaction is vital when underwriting billions of dollars’ worth of risks but have we evolved enough? On average 25% of each premium is spent to process the risk through Lloyd’s – is this really best for the very people that we all work for – our customers?

There are many other examples we could list from the market facing Brokers and their drinking habits, to the number crunching Actuaries whose IT systems are archaic compared to the Finance or Banking sector. All this is up for debate but it does beg the question, what is the future of insurance? How long can we uphold an industry built on tradition?

Written by Joel Westley 

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