Insurance Innovation of the Month: Brit Insurance – Ki the digital syndicate

Ninety’s “Insurance Innovations of the Month” feature contains regular snapshots of real and recent insurance innovations, based on conversations with the innovators behind them. They are drawn from anywhere in the world, and from all categories of insurance. If you’ve got an innovation you’d like to highlight, drop us a line at ninetymarketing@ninety.com.

• Insurer(s): Brit Insurance Ki
• Market(s): Lloyd’s of London
• Insurance type(s): Specialty 

Problem

Brit Insurance wanted to tackle the expense ratio pressure in the Lloyd’s of London market. This, the birthplace of modern insurance, operates on what can appear to the more ‘normal’ insurance professional to be an archane set of mechanisms. See here for a beginner’s guide. Whilst unusual at first glance, it operates much like any other marketplace and has served the specialty market in particular for 300+ years. For some decades now, though, this market has operated at high expense levels – currently circa 42%. It is clear that continuing at this level will not be possible or competitive in the long term. Brit wanted to find a way to solve the high expense ratio challenge for the market.

Solution

The solution Brit have built, Ki (pronounced ‘key’) is the first fully digital syndicate for the Lloyd’s market, partnering with Google Cloud to bring this innovation to life.

The Lloyd’s market is syndicated, with multiple risk carriers taking a share of the same risk, and operates on a lead-follow model. The ‘lead’ syndicate negotiates the terms and price with the broker, and a ‘follow’ syndicate agrees or doesn’t agree to that price and level of cover. The ‘follow’ syndicate either chooses to take a percentage of the risk or not. Intermediated insurance is really about tying capital to risk, and getting that done as efficiently as possible. That’s what Ki is trying to do: to use a data science approach to underwriting, streamline operational efficiencies, and increase the underwriting performance.

With Ki, Brit created a follow-only syndicate. That means they don’t have to negotiate terms of price, and can be very data-led, which in turn means they can have a fully digital solution, with no humans on the front-end. Ki uses an algorithmic approach, developed in partnership with University College London, the leading academics on algorithmic design for the financial markets.

Brit Insurance are underwriting experts, but they knew they needed help in terms of building technology and algorithms for financial market. They wanted to partner with the best – in this case UCL for the algorithms, and Google Cloud for the tech. They approached Google Cloud about 9 months ago and worked closely with a range of teams there, including cloud infrastructure, and the engineering teams behind Google Maps and Google Search. Together, they built the technology from the ground up.

Ki is a very unique proposition within the specialty insurance market. It is also the first incubated business from the partnership with Google Cloud. Yes, Ki is a digital challenger insurer for the Lloyd’s market, but the Brit team continues to work with Google Cloud on broader insurance problems, and we can expect more exciting innovations to come.

Outcomes

It’s still early to talk about the outcomes but the goal is to reform or redefine the follow market in Lloyd’s of London. Lloyd’s set out its vision with the Future of Lloyd’s programme. Brit, as a Lloyd’s insurer, is fully committed and invested to this vision. Their initial contribution to moving the market on is being the first mover in this form of digital transformation at Lloyd’s, and trying to prove that a fully digital model can work in this market. Someone had to make a move, and they were willing to make that investment.

Social impact

As a social, for-purpose business ourselves, Ninety is always looking for the social, human or environmental impact of new ideas in insurance. Here, the impact is less clear than in other types of innovation (think health & wellness). However, what Ki does is to eliminate inefficiency in the process of connecting capital to risk. In doing that, it should reduce the gap between the cost of the risk, and the cost to the customer or client. That leads to fairer pricing, which is more just. We applaud their effort.

 Tips to other innovators

• The partnership model is very interesting, and Google Cloud and UCL were great. The collaboration model was the best way here to get a best-in-class solution, as long as you can get comfortable with IP arrangements.
• It’s always about talent. Part of the main success has been attracting a very diverse team. Brit spent a lot of time hiring and building a team where no-one has specialist insurance knowledge. That’s what the business has in abundance. Brit secured a range of talent: product skills, and top-tier tech talent (the latter being the hardest to attract into specialty market).
• Getting buy-in from the C-suite. Brit set up innovation team as a cross-functional horizontal, reporting directly to CEO. That enabled the team to execute the concept. There will always be bureaucracy, which is all fine in a large corporate, but it’s important to set up any innovation function correctly, with enough budget, power and autonomy to go after problems and look to explore them. Kudos to Brit’s CEO and management team for putting faith in the team to execute the Ki vision.

Categorization for insurance innovation portfolio planning: 

Ninety Ten Big Ideas: this is an example of Ninety’s “Intelligent Risks” and “Risk Prevention” Big Ideas.

Ninety Ten Types of Insurance Innovation: this innovation combines the following Ten Types categories – 1) Operations & Claims, 2) Added-Value Services, 3) Customer Experience, and 4) Brand & Marketing.