Digital shift: the race for data in trade and distribution accelerates: Verisk

The growth of digital connectivity in the insurance market has brought with it an appetite for more granular data and greater standardisation of systems, which has arrived in the form of application programming interfaces (APIs), but the insurance market must avoid creating “a spaghetti junction of APIs”.

This was the view of Paul Latarche, chief commercial officer at Verisk Specialty Business Solutions, speaking to Intelligentinsurer.com, the website and digital hub for news, interviews, analysis and debate.

“It’s been an interesting two years with the pandemic and people becoming more digital out of necessity, as well as the drive towards that we’ve all had,” said Latarche.

A lot of the changes he has seen in the past couple of years have been around connectivity and greater digital use. And it’s in this context that Verisk has been working with its customers on how to trade and distribute products, and work with third parties, in a much more efficient way.

The shift towards digital networking combined with efficiency has heralded the start of a greater need for data. “How to get hold of data, use it better, and how to access more markets quicker,” Latarche explained

External projects, such as Blueprint 2 at Lloyd’s, are also key to how Verisk plans ahead for its clients. “What’s coming out of Blueprint 2 is absolutely pivotal, especially around data and the market initiatives that support that.”

Whitespace, a provider of digital placing technology for the re/insurance market, which Verisk acquired in 2021, is set to be a further game-changer for market data use in future, according to Latarche. Verisk has wasted no time in onboarding more brokers and carriers to the fast-growing platform.

Sequel6 expands

Another market transformation project that is well under way is Sequel6, a Verisk collaboration with six market-leading Lloyd’s managing agents to develop data and API standards for the London Market.

The challenge, Latarche said: “Is that historically, as a software supplier we would have a big race with our client base to get to portals and distribution.

“You’re having to say ‘log in to my system versus someone else’s’. That toing and froing, the competition, should it be the broker’s platform or the carrier’s platform, has been going on for a number of years.”

Now there is a movement away from portals because there’s a need to build something that people will come to, he said.

This shift has not been an easy one. “People want connectivity hubs, to which a player is connected in order to access multiple markets, and vice versa. But we weren’t getting anywhere quickly—everyone had their own flavours, ideas and solutions and we all needed an API standard.”

This is where Sequel6 stepped in. “We pulled together a select group of the largest carriers in the London Market and we worked with a core to define how we would pass data between us if we were pricing and rating business,” said Latarche.

Once the Sequel6 group had defined an API standard they could work with, it was gifted to insurance industry-owned organisation ACORD so it could be shared with the market as part of wider change initiatives.

“Sequel6 has been a fantastic sounding board for defining how those involved could go about making the market more streamlined in its digital connectivity,” said Latarche.

“The change we’re seeing now is that an increasing number of portals are moving towards APIs for connection,” he said.

“It has moved all the way to APIs now as opposed to portals. The downside that we have to be careful of is that we don’t want a spaghetti junction of APIs. There has to be some commonality so that we can connect and plumb into these systems.”

The original Sequel6 group of companies—Markel, Beazley, Hiscox, Chaucer, Brit and Liberty Specialty Markets—has grown as more companies are in the process of being onboarded.

Sequel6 companies will use the Verisk Sequel hub platform to connect their systems once and connect to multiple brokers at the same time. The broker systems can connect to one Sequel hub and access multiple carriers in the same way.

“This hub is working to be an API gateway that holds the two different ends together to save brokers and carriers a huge amount of effort and work,” Latarche explained.

“It allows them to communicate and collaborate but compete at the same time.”

Latarche is seeing a lot more business coming through the platform “which is follow only, more algorithmic, and zero touch”.

In the next 12 to 18 months pricing and distribution will be about getting access to the right data. This is particularly important for new digital launching syndicates that use algorithms and zero touch.

“The key for a long while has been getting access to the right data, at the right level of granularity to make decisions. It’s easier to price business if you have full access to the data and you’re using it. If you’re leading the business, you’re the broker with the data or the underwriter,” he said.

“But a lot of our carrier clients and the new digital launching syndicates we work with want access to the data to make algorithmic-based decisions. The race to a lot of this is getting good quality data in which to adjust your rating models and algorithms from which to be able to write.”

Data is key, which is part of the reason Sequel, already a Verisk business, rebranded with Verisk at the beginning of the year. “Verisk has so much data available, it owns huge amounts of data across the market which helps to augment and support the decision-making process.”

Latarche concluded: “We’d love to get more people involved with Sequel6. If other carriers or brokers are interested in finding out more, it’s an open forum, which we’re putting people on to. Do get in touch.”