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BOSs

Back Office Systems - just what are they?

In the London Market, the term "Back Office System" is as old as the hills and you'd be forgiven in feeling there was a somewhat disparaging tone in the name - with the need for Patrick Swayze to confidently strut forward and state "nobody puts Baby in the corner"

Back Office systems are the heart of the London and international Insurance market; the silent workhorses, unappreciated, underpaid and highly justified in any lack of confidence or inferiority complex they may have developed. With the new boys on the block: The Internet of Things, Apps, Robotics, Artificial Intelligence it is any wonder the humble BOS could constantly fear the writing on the wall is looming large. But is the Back office System really the old beaten up Landrover, reliable and stable but lacking in modern form or function? or does it possess more within its armoury than its users are aware of?

Whilst start ups make do with an Accounts package such as Sage and MS office, Word for the Slips, Certs, Schedules, and Excel for record keeping! - No controls, No programmed checks, No escalation, No tracking. No single version of the Truth. Granted low cost, but not joined up, and certainly not scaleable, or even really compliant in any modern interpretation of the word.

By the time the organisation reaches its teenage stage, this new maturity and its associated sense of omnipotence obviously requires a more grown up solution.... and the hunt for the biggest decision likely to be made (excluding staffing) begins... Which system?

So what should the buyer have on their check list? "Should I employ a consultant to compile an ITT/RFP/RFI (or any other series of random letters otherwise known as a list of requirements.)? "Should I see every system advertised? "To Cloud or not to Cloud? "What about the one my mate uses at their company? "What do they actually do? "What do they not do? "What don't I know that I should ask?

That first meeting with a vendor takes a predictable form, a series of investigation questions on both sides, the posturing stage, the vendor has resource capacity for you, whatever your size, and whenever you make up you mind! The buyer wants the Veyron for the price of a Fiat 500, and obviously all development for your particular whim (to mirror what you were doing in MSExcel) for free. But is it really that unreasonable, these systems are surprisingly complex, and constant changes in the Broker's processing behaviours, the added layers of compliance, and the integration of other systems has posed the bench mark for the BOS that is flexing its muscle and seeing off the inexperienced less capable offerings. This market's very purpose is to reinvent, redesign and spin up new products, handle unique situations, and one off risks, all of which are a set of parameters that challenge the repeating task approach that computers are built to handle.

So what should your BOS offer you? 

  • Logging of Quotations
  • Production of a document to send that quotation to the client - they still like to read an A4 document
  • Convert that Quote to a live risk when the Firm order date is known, Contract Certainty doings its stuff underneath to ensure a deadline is never exceeded.
  • Ensure all the pertinent data is collected, Class, Type, Period, Reference/UMR, Currency, Dept, Country, State, Claims reporting to, SL Broker No..... (feel the ER3001 pain) 
  • Set out the Clauses/Wordings the contract will include, ideally let it read my mind rather than need me to tell it.
  • Set out the segments of coverage/sections, including sub periods, Risk Codes, Est Premium
  • Augment that data with Risk level data. Traditionally Reinsurance and Wholesale Broking never bothered with this, but if you intend to report Exposure Bordereaux then you will need a system that captures class specific data, a schedule of Locations, Ports, Plantations, Depots etc and for each the ancillary data that Underwriter is always hankering after, the Address, Years Trading, Year of Build, Soft Stories, Sprinklers, Commodities hauled, perhaps we call this the "Insurable Interest." Perhaps it would be good to see where these risks are located? a Map?
  • Next the specifics being covered at each of these locations etc, including the Sub Periods, Descriptions, Excess, Rate & Premium, the "Risk Items".
  • All this should be on a policy that can be issued alone, or be a Proportional Treaty, a declaration on a Lineslip, an Off Policy on a Binder or perhaps be part placed on more than one Binder or a combination of Binders and Open Market. These contract styles each behave differently and the BOS needs to know how to be flexible and operate in a known, predictable (and Auditable) way. Each element has to be coded so analysis is possible - after all that is really the only reason to have a BOS at all. other than to keep the FCA and Lloyd's happy.
  • Each of these sections needs a market configuration, subscription, co-brokers, Introducing Brokers, written lines, signed lines, order%, Stamps, sign dates, commission, in all of the combinations imaginable. Make sure everyone on this contract is a good person to do business with, so TOBAs in place? Sanction Checked? Authorised to be used as a Client, Carrier or Agent?
  • Once the contract is set up, produce that all important contract document; all beautifully formatted in your company style, all the data you have lovingly input into your system dropping into place and then those clauses and wordings all tailored and perfectly positioned at the touch of a button.
  •  Then we need the money; process a transaction, make sure all the parties that were in those Market configurations, per section, involving Binders, Syndicates, Company Insurers, other brokers all need the correct proportion of premium, at the correct time, with the correct terms, in the correct currency.
  • Then tell those parties what is happening, Debit notes to Clients, LPANS and Closings to insurers and Silent Agent Credit notes for those Co-Brokers. and again tell them what they owe or are owed with Statements and Bordereaux, in various forms, Booked, Paid, Exposure, and each to carefully control what should be reported and what money will be moving when.
  • Be sure you can do this in any currency, maintaining Exchange Gains and Losses, Bank charges and reconcile all the money movement with your Bank accounts. Operate across multiple divisions, covering all the classes you do now as well as those you might do in the future.
  • When these policies have been running, it's inevitable a claims will occur, can it do that too? and will the result of putting those claims on support, Direct Settlement, TPAs, Fees, VAT, produce Earned to Incurred  and Treaty Triangulations?
  • All the way through, these documents should be automatically saved, filed and stored, together with documents received attached to emails, "shucks", lets store the emails too.
  • Make sure you can search by a totally unpredictable set of criteria because no two employees or Users will work a system in the same way. Make sure these Users are only able to use the bits of the system they are supposed to do. And stop them doing something they shouldn't would be cool too.
  • Make sure it has loads of reports, and they are all the ones you would have designed yourself if you had been asked.... all the "standards ones"
  • Oh and a web portal on the front to get the Agent input the data  - would save loads on expensive technicians processing the high volume - low value part of your portfolio.

So is the BOS really something Management can dismiss and forget about, certainly fail to budget for in User Training to get the very best out of both the staff and the system. In an age where users are reducing their IT literacy in terms of how data relates to other bits of data, or dependencies of one task would effect another, this time spent understanding the system they use every day is paramount, There won't be an App for that!

Is that what the Lloyd's and London Insurance Market is about?, Not thinking? To be replaced by chat bots and automation?

I am definitely no Luddite, I am a pure technologist, a relative rarity - a female, a programmer with Insurance, Marketing and Business credentials, 3rd Generation London Market, forward looking and constantly inventing new solutions to every day problems, whilst firmly up-holding the principles of Agile, generic development and flexible supportive working. But foremost, an IT geek at heart, through and through like Brighton stamped in a stick of rock. But when technology is apparently embraced without understanding the complexities, fundamental basics, the data that is already being captured and available, then I would always question if the tail is wagging the dog and if the right questions are being answered in the right order.

So back to the question, is the BOS to be consigned to the back office or should "Baby" be displayed for all to see, with appropriate investment and understanding of just how powerful a tool may be already within your midst. You may just find, (if you have the right one) it holds a myriad of surprises, and with some dedicated focus you may reap considerable rewards, and (to use one last analogy) your ugly duckling may just be a swan waiting in the wings.

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