Commercial insurance specialist Brit has announced the first digital, algorithm-driven system for insurers to underwrite complex assets like skyscrapers and satellites away from the floor of Lloyd’s of London, under a new, standalone brand: Ki. When insuring complex assets, no single insurance company is usually willing to take on all of the risk – to
Commercial insurance specialist Brit has announced the first digital, algorithm-driven system for insurers to underwrite complex assets like skyscrapers and satellites away from the floor of Lloyd’s of London, under a new, standalone brand: Ki.
When insuring complex assets, no single insurance company is usually willing to take on all of the risk – to get around this, syndicates instead share that risk. Dating back to the shipping industry in the 17th century, Lloyd’s of London has been the marketplace where these transactions are negotiated and agreed, face-to-face.
How it works
What Ki will enable when it launches next year is for brokers to search insurance for their clients through a Google-like search function, or by entering the unique market reference. The Ki algorithms then get to work to make an offer to the broker, depending on the type of risk, their level of exposure, and their existing portfolio.
“Ki’s algorithm makes the broker an offer dependant on its risk appetite and the terms offered by the broker,” James Birch, head of innovation at Brit told Techworld. “It uses historical data and other available data sets to decide on the offer it will make, providing a real-time and transparent black and white offer to the broker and their client.”
The broker is then given the option to ‘follow’ once the lead brokers have created the position. This is signed with a digital stamp and a confirmation email lands in their inbox. Brokers can also keep track of their portfolio in a CRM-style platform.
Brit built Ki in close partnership with Google Cloud and enlisted the help of the computer science department at University College London (UCL) to design the algorithms, which are similar to those seen in use at quantitative hedge funds, an approach which has raised questions over transparency.
“We believe this is the most transparent way to do business, we immediately offer the line we are willing to take – the offer we give you – up front,” Birch said. “There’s no grey area.” This effectively allows brokers to access a quote remotely and within a matter of minutes, rather than spending hours haggling on the marketplace floor.
Brit will work with a number of partners and users for the rest of the year to test and iterate the platform before launching in 2021.
The benefits here are twofold: brokers get a more user-friendly and timely way to access follow positions, and Brit can carve out a huge chunk of cost from the lengthy end-to-end process by using technology where possible.
“We looked at capital markets for inspiration and wondered why we couldn’t do the same for specialist insurance,” Birch said, “to take a quant-based approach and use data science to improve the performance for easy matching of risk and capital.”
When Birch arrived at Lloyd’s for the first time, he was surprised to see a market operating unlike every other – still very much “human-led”, “intermediated”, and “non-automated”. With his background spanning VC, startups, and financial services, he also saw an opportunity to bring some of that technology into this unique slice of insurance.
Modernising the experience
Ki was developed within Brit under the leadership of Birch and a standalone innovation team, which was established 10 months ago. That team is now tasked with finding other industry pain points to resolve using technology, and will continue to work with Google Cloud as a technology partner.
As a result, it has been run a little like a startup, with a small team of relationship managers to get brokers into the funnel, a portfolio management team who will monitor and tweak the underwriting in the algorithms, a technical developer team, and operations and finance back-office functions.
“We have been on a transformation journey as Brit for a number of years and the innovation team means we think we have the best insight into what the problems are for our business. Challenge the status quo and give them a set of problems to solve. Ki is one of the first to come to fruition,” Brit CFO Mark Allan told Techworld.
This marks an important landmark for the famous old insurance marketplace, which is a digital laggard even by the standards of the financial services sector and only began allowing brokers to enter without a tie on in 2018.
“The pandemic situation is obviously awful for a lot of people but has brought into light new ways fo working potentially more suitable for the future,” Birch said. “We really are just following other financial services markets that have already gone this way.”