Why do reinsurance brokers send zip files containing spreadsheets to their clients (the cedent) and to their markets (reinsurers)? And why are reinsurers happy to receive that submission data, which powers billion-dollar decisions, in those zip files containing spreadsheets? Why, in our industry, do our highly intelligent colleagues spend so much time unzipping, copying and pasting data from one spreadsheet into another?
It’s astonishing when you stop and think about it. And it made us ask, why?
Certainly not in our industry, where manually adding countless zeros to the ends of eye-watering numbers has become part and parcel of the profession. Not to mention an industry where loosely-committed committees routinely invest millions of policyholder contributions into industry modernisation projects, with somewhat dubious outcomes.
Also not likely, given that our industry’s inefficiencies have spilled out of our industry’s trade press and into the mainstream media on numerous occasions. Despite this, a shocking proportion of the expense ratio remains attributable to people doing manual copy and pasting work that a computer, in principle, could do for them. What’s more, the industry spends copiously on top of that on legacy IT improvements, despite the common observation that the vast majority of these projects do not yield results, but rather, dig the problem deeper.
Yes, there is, and the technology has existed for a couple of decades. APIs, or application programming interfaces, are how tech-savvy companies exchange information in almost every other industry. Salesforce launched the first major public API in the year 2000 – that’s more than twenty years ago – and nowadays, they make up the muscle of most online exchanges, handling data push and pull requests that traditionally had to be entered and extracted manually.
Could all brokers and reinsurers start building connections between each others’ systems to enable data sharing? Or even just the largest?
At this point, Munich Re has three separate integrations to manage, each with data organised in a different way, meaning no single point of entry. Each and every cedent now, too, is required to prepare data in a particular way to meet the needs of a given broker and the given reinsurer they have established a ‘clever’ means to trade with.
It’s not hard to imagine how complex this becomes if Swiss Re, Hannover Re and SCOR start doing the same too. At this point we have three brokers and four reinsurers, creating twelve integration touch points. And in a market with hundreds of other brokers and reinsurers around the world wanting to trade with each other, very quickly this gets extremely complicated and expensive indeed.
When you drive your car from your house to the supermarket, you don’t build a dedicated road that goes directly from your house to the supermarket, do you? Because if you did that, you’d have to build hundreds of roads going from your house to all the different places that you wanted to visit. Instead, a neutral body builds roads for all to use, and even maintains those roads (let’s ignore those lingering potholes in this analogy). The roads are therefore “standardised,” meaning that they will be suitable for different people using different cars.
This is what we are enabling at Supercede. Our road system allows any broker to send data to any reinsurer, in a modern and efficient way (no more zip files). We also allow any cedent to share their data with their broker in the same fashion. Our solution is not theoretical, it is live and in production and being used by cedents and brokers at this very moment.
I used to be one of the actuaries who had to sit unzipping, copying, and pasting data instead of focusing on the good stuff that I had been trained for. Sixty to seventy percent of my time was spent just getting data out of broker spreadsheets, into internal spreadsheets, and I have a PhD in physics. Our industry is full of bright, intelligent people and I want them to be able to focus on doing intelligent things, rather than fiddling over data.
Yes, we may be one of the oldest industries in the history of modern civilization, but that doesn't mean we have to suffer the oldest systems and processes.
Come check out our road system at supercede.com, or better yet, let me take you for a test drive.
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