Going live in 2018, Delegated Data Manager (DDM) is a central bordereaux processing platform used within the Lloyd’s of London marketplace to streamline the collection, validation and processing of data for delegated authority (DA) business.
Developed in partnership with the market, the system ensured that coverholders and delegated claims administrators have to regularly report DA data including risks, premiums and claims in order to transact under their contracts with Lloyd’s syndicates and abide by local regulatory requirements. DDM was mandated for use for Lloyd’s Europe business from 2019 then further expanded to include Lloyd’s Europe Bulking Lineslip business placed in the Lloyd’s market from 2021. DDM was then made available to Lloyd’s insurers with company market business from May 2020.
Earlier this year, the decision was made by the market to formally remove DDM as a core market service, with the contractual end date for DDM earmarked for September 13, 2024. It’s a decision that prompted significant change across the DA market as many managing agents have taken stock of what they want to do next. “It was never a well-favoured system,” noted Paul Templar (pictured), CEO of VIPR – which is now the largest provider of bordereau management solutions to the Lloyd’s market.
“Lloyd’s market’s people don’t like systems being imposed on them, so they kind of rebel against them,” he said. “As a result of that, all bar about six managing agents have stepped away from DDM… so it has worked very much in our favour.”
Since its inception in 2009, attitudes have evolved from seeing data as a “special sauce” not to be shared with anybody to taking on more of a collaborative approach. That’s in large part due to enhanced recognition that the raw data itself is already being shared, particularly when you consider the subscription market and all its parties receive the same data. There’s an increasing understanding that the only difference is what you do with that data – that’s your “special sauce”.
In conjunction with this evolution, VIPR has turned its attention to working more with the Lloyd’s broking community. “With a number of large brokers now using the platform, it means we can really start to give a complete story about the data journey,” he said.
“If you can imagine, at the moment, you’ve got data being supplied by an MGA into Lloyd’s, for example. So, what they’re doing is they’re extracting data from a system, they’re emailing it to a broker and the broker’s doing their piece. They’re then emailing that data to a managing agent, or group of managing agents, they’re all independently doing their stuff, and then, quite often, it goes on from there to reinsurers or other systems and things. So there’s a lot of duplication of effort, a lot of really inefficient processes throughout that whole chain.”
Greater efficiency is possible across the ecosystem if the right systems are in place to allow data to travel directly from the MGA source system through the creation of data conduits that supply data directly to the involved parties. Where you have a subscription market such as Lloyd’s, the present way of doing business is further complicated by the fact that you have a lead managing agent and a number of following markets, and it’s quite possible that each of those markets is doing its own thing. Efficiency looks like empowering the leading managing agent or even the broker to process that data and then share that processed data with all the other parties involved.
“There is quite a bit that can be done to slim down the effort required to get data into a fit state and then shared throughout the market,” he said. “And we heard anecdotally from one managing agent that they were spending something like 0.25% of their gross written premium simply collecting data – not processing, but just getting it. And for them, that was over a million pounds per year just to get data. So there’s a massive issue here of inefficient processes that, if streamlined, could lead to big cost reductions.”
Assessing how the appetite for operational efficiency has shifted across the Lloyd’s market, Templar noted that it’s a journey that was initially prompted by regulatory pressures from things like solvency in order to collect data - but didn’t go much further than that. What’s happening now is that the market is in a position where the data being collected is being properly analysed and then used to inform either future underwriting or simply to share with downstream systems.
“So we’re getting that sort of efficiency and benefits from the data processing,” he said. “We’re coming out of a period of good growth in the market so there’s a lot of money in the market. It has been quite a hard market and a lot of money has been made. People are starting to really invest in systems now, but we expect that to become a softer market over the next few years, and that, we think, will drive more of this operational efficiency play.”
