It is worth reminding ourselves why this is such a vital process for the market, and more importantly for its business partners and clients. Today, the London insurance market produces almost all its contracts as documents – often in Word. While this has meant that underwriters and brokers have the flexibility to create bespoke contracts, that comes at a price. These manual processes mean delays and errors and our clients are paying the cost of transacting business in this analogue fashion. And they are not alone. Brokers and underwriters are undertaking labour intensive processes to extract data, as well as not being able to take advantage of automation including portfolio analytics.
By allowing business to take place on the basis of a digital exchange of data, the electronic binding of the risks and a fully digital contact lifecycle, everyone in the insurance value chain will benefit from:
- Capturing a minimum amount of structured data at the point of bind will reduce re-keying.
- Reducing errors and queries by having clean and accurate structured data.
- Extracting data will be fast.
- Claims handling will be improved by access to structured customer and risk data.
Ultimately, we want the market to move to a fully computable contract, a contract which can be read and understood not only be humans, but also by machines. The first stage was defining what data was required and the market has agreed the CDR. Next is identifying who puts in what data and when, so that data can flow to everyone involved in the contract. Then it is how to structure that data in contract and that is the iMRC. All of this will ensure that accurate, ACORD standardised data will flow through the entire insurance transaction lifecycle with minimal human intervention. It will be fundamental to the success of our transformation for open market placement.
The first step on the iMRC journey is updated MRC guidance. This will specify all the data that is needed downstream, so everyone knows what is required. The second part of the iMRC is being far more specific as to how certain data elements should be represented.
What we are not proposing is that all contracts conform to any one specific format – that is for the firms themselves to decide. But it will mean they are required to include the essential data and that it is in a prescribed fashion. While the consultation is underway, the Data Council will be conducting a full review of the amendments that are being proposed to ensure they do not compromise any legal and regulatory requirements.
The launch of the iMRC does not mean there will be a move to fully digital contracts immediately, however, it is an exciting first step on the journey. But this is the market’s contract, so we want the market to tell us what it thinks.
Please get involved and visit the LMG website – Market Standards – London Market Group (lmg.london).