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Has Spring Sprung for TOM

a reflection of the March LMG Forum

Following on from my previous post of the March LMG Forum, the fourth speaker of four was Adrian Thornycroft of the LMG TOM.

Adrian opened by suggesting that there was feedback from the market that many still were not clear "What the components of TOM were and how do they connect up?"

Starting with the "Customer". There is no planned change to face to face, just "enhance it". But this left me pondering, which customer was he referring to, as the remainder of the pre-prepared piece was referring to Slips and structured data extraction etc, I presumed he was firmly covering this from the perspective of the Facultative and Wholesale Lloyd's Broker where the Customer is in fact another Insurance Practitioner or at least a sophisticated buyer. Although of course there is still a great deal of Commercial Direct Business that is swimming around EC3, where the Customer is the unsophisticated buyer. We have a vast swathes of terminology misuse or overlap. Indeed in Steve Morrell's letter to the FCA in 2014 he defined the Consumer (another term) clearly, and in somewhat fewer than the 1663 words the FCA used. This was with particular reference to the issues around Sanctions and TCF.

However with the explosion of UK MGA's in the London Market, not just the overseas variety who shave struggled with Londonisms for years, means there is a muddying of lines and thus terminology on an even greater scale – One man's Brokerage is another man's coverholder commission. It should be completely clear of whom we speak in these situations, let's agree it is the recipient of the pre firm order document, known to many as the SLIP but to others as a Schedule, Indication or Quote or Bid or.......

Adrian continued with reports on feedback received from the Market, that these documents are created outside of data based (sic) systems, the idea that the majority of the Market practitioners open up MSWord, and start typing, seems an odd one to us at Morning Data. We certainly expect all our Clients to add data into the system and from that generate a SLIP, and our Clients have done that for over 20 years. Thus the next part in the TOM chain, that of the provision of a central Clauses database and a Tax calculator, would be of particular interest to us to provide integrated solutions for our Users.

But it would appear these integration points are not yet in scope! I was not left much clearer on exactly how these two pieces would be delivered - I think that was the glossed over "techie bit". But we, the technologists, have long since wished for an accessible (but computers) single, central source of clauses, is this the chink of light we have hoped for?

A Tax calculator would appear to be equally interesting, although this is normally paired with the Technician's entry along with the money, as part of the financial transaction, rather than at quote stage, but with ever more complex international tax issues (are they to be applied to the Risk, the Section the Insurance Interest, the Territory and what if some Interests on a Risk are in different Territories?), the SI, the Gross, the Net - who's net? It would be great to get that further upstream to enable fewer holdups in the workflow and processing of the "back office" activity downstream, otherwise known as Xchanging rejections.

The next blob on the diagram was SDC, Structured Data Capture – the extraction of data from documents. I paused…. staggered at what that implied…. at this stage, in the 21st Century, Brokers are still out there opening up Word and starting to type, or edit last year’s SLIP, rather than not having to input the data into a system from which a slip is created. Even if there is some copy and pasting going on, a new document derived from "checked and validated" data (which itself should be present if you are renewing it from last year!) means the data is already there, and already Structured!

However on reflection, maybe not? I recently came across a SLIP provided to one of our MGA clients that was authored from one of the big 4, it had a 12 month period of cover described as “30-JUN-16 to 30-JUN-17”, which by my calculation is a year and a day! Would SDC pick that up? Or would the database that the slip was derived from be better to check that was indeed what the Broker wanted?

Or is the real issue that Brokers still won't share data, or believe they are not the Data input Clerk of the Carrier?

We, and I can’t believe we are alone, have captured Risk, Section and Insurable interest data for years and pushed this out into the documents. Are we, at Morning Data, really light years ahead in this? Granted what is captured is continually expanding as the requirements change; Yes, we have partnered with Portal providers, like Surely, to capture the same structured data from source with their product builder; Agreed each product poses new challenges of what the data is for and where it is wanted by the next link in the chain - but the concept of data first and document after has been core for decades. But we have nowhere to send it!!

And then there is the discussion of extracting bordereaux data, which is often semi structured already - if you regard rows and columns as structured? Look how long the market has danced round that handbag! Websites contain structured data, as such it is relatively easy to extract data from it. All we have to do is agree what core information is required. And for those avid followers of my posts, read my previous post on "the elephant in the room".

So I would urge the discussion to START with the provision of these with Vendor Integration as a starting point, not an after-thought! Even so it appears this may be phase 2.

So these are the first two parts of TOM. Next was PPL. Going digital allows brokers and carriers to be more efficient. PPL is designed to be placing hub for contracts to be agreed upon, the document repository and collaboration functionality, with attached messaging service has been delivered together with a contract quality tool, allowing carriers can call on this to flag up any issues before the risk is bound. So far two classes of business have given 4000 risks and 3000 endorsements. Marine is to follow next week, after narrowly escaping a picket line revolt, and then four more classes have entered the .... "discussion stage". These are possibly to be rolled out later this year or early next year. This doesn't help anyone integrating systems, computers don't work class by class.

With contracts in Word or PDF format the extraction of the data allows structured data to be sent on to the central "Data & Orchestration", but there did not appear to be any provision for those who already have the data in a structured format and are ready to send it.

Taking us to the right hand side of the diagram, we were now in the world of CSRP. Integration would be progressed for the "larger Brokers who are integrators" and for the smaller participants a Portal option, obviating the need for a gateway of their own and enabling access to EBOT & ECOT. There is an upload spreadsheet option but, as of yet, no Binder provision. As many "smaller" Brokers (some quite sizeable) have a variety of mixed business, Fac, Reinsurance, Binders etc it’s just not practical to sign up to something that processes part of their business but not all. and when they already have a Back office system that has done the transaction already then surely providing a correctly formatted feed, in whatever language or format required would be the next step, then vendors can code that feed and Robert's your Aunt’s husband, we have traction!

But alas, this Portal has no current web service in flow and so the only option is typing in the transaction that may or may not be calculated in the same way as the source broker system, which is controlling the movement and reconciliation of the cash through their organisation. The days of ignoring penny and cent roundings and writing them off must pass, but only one system can do that maths at any one time!

What are the TOM backers afraid of not supporting this, a belief it would be an easy option out to bypass having their own gateway and upgrading their systems to "full EBOT/ECOT". It isn’t about upgrading systems, that is only likely to be done if some Russian Oligarch or Football club owner has a hands out lollies of encouragement. That is not the way to get the results apparently being sought, it hasn't been the way in any other industry from the evolution of mobile devices to the global upgrade of Air traffic control. It has always succeeded with no brainers for the end user, modest PoC investments and baby steps for market adoption. Not bombastic enforcement for all involved whatever their size. Certainly, in a market that prizes its ability to handle niche business, the entrepreneurial expertise being seen through an endless stream of start-ups; those agile enough to adopt new technologies at the front end, from AI, Robotics, wearables etc but who are constrained in continuing the process with onerous, extremely expensive onward processes. Especially when there are cost effective solutions sitting in the wings that are continually overlooked through ignorance and politics.

That all said, and notwithstanding the respect I have for those who have been charged with the modernisation mantle, Adrian's session was overall a good summary of how the activities link up. But I fear what was lacking from the discussion, was one large category of market participants: the Vendors of existing systems

So, when may we see the tax calculator and central clause library, not till 2018/19.... so can we be involved in what that might look like we, as Vendors should be to connecting to it? At the current rate of Tech innovation in the wider industry, 2 years from now we should be doing that as second nature!

Is SDC really needed for as much of the market as perceived - extracting data from documents - and what is the solution for those that created their slips from structured data already entered? It seems a merry-go-round open to fast degradation of data quality or extremely high costs to compensate.

Adrian summed up that there will be "a survey to find out where you all are" in time.... But, for me, surely the engagement of vendors should be pushed far further up the priority list, which would make far greater advancing steps.

Apparently, we can find the London Market on Instagram and Facebook or "even on the phone", good to see the enhancement of the face-to-face.

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