ArticleOpinion Algorithmic underwriting

APIs: the London Market’s unsung hero

George Roberts
George Roberts09-Aug-2022

The London market has a problem. Nope, we’re not talking about the troublesomely high cost base of doing business or the ever-present risks of climate change...

APIs: the unsung hero of the London Market

This problem is fundamental and born out of being a marketplace that has undergone and successfully navigated profound technological change over its 300 year lifespan.

However, when you have a period of significant change - we’re talking three and a half industrial revolutions - coupled with a marketplace that’s made up of many competing yet collaborative participants, you will naturally find differences in process, technology and strategy, which manifests in each participant having various legacy systems and different processes to go with them.

For a marketplace where participants do not collaborate, this is not an issue: for example, in a fruit and veg market where vendors sell their own produce and add up their sales at the end of the day, it doesn’t matter to other vendors how they record their stock in a notebook or what their receipts look like.

However, in a subscription marketplace where vendors not only sell the same product but also participate in the same sales and need to quantify and share this information in real time, a lack of consistency across processes and systems presents a problem.

Enter the hero of this story; Application Programming Interfaces, or APIs.

APIs are used as a mechanism to translate and transfer data between two different systems. In the real world, the equivalent would be two people who speak a different first language - say German and Spanish – being unable to communicate and, so, to understand one another, use a second language - like English - instead.

APIs provide the answer to overcoming the challenges of a fragmented and siloed marketplace and enable information to be passed between two systems seamlessly.

For example, risk data can be automatically transferred from a broker’s PAS directly to an insurer’s PAS at the point of quote or bind, eliminating the need for rekeying data. Insurers could also integrate with technology providers to perform enrichment or decision-making with data in real-time - at the point of entry, for example.

Even though these immediate applications directly address a huge historical challenge that the insurance industry faces - unstructured data and numerous, legacy systems among market participants - the humble API is yet to be fully utilised by the insurance market.

APIs ultimately unlock a massive win for insurers by reducing rekeying of data and therefore operational expenditure, and are the mechanism for joining competing yet collaborative players to create a more coherent ecosystem.

It’s for this reason that Artificial’s platform is designed with APIs in mind. Our product can be integrated with any system with an available API connection, which means we can enrich clients’ data in real-time, plug into in-house and third-party pricing tools and seamlessly integrate with any insurer or broker’s tech eco-system.

In short, APIs enable Artificial to be the glue that joins legacy systems together, rather than just another legacy system.

We’re currently facilitating algorithmic underwriting between a London Market broker and Lloyd’s Syndicate using APIs. In this case, when the broker enters the risk into their PAS, the risk data is sent immediately via API to the Artificial platform, which contains the Syndicate’s underwriting appetite.

If risks meet the underwriting criteria, they are accepted, have a written line and rate calculated, and the risk details are then sent back via API to the broker and underwriter’s PAS. A simple integration that streamlines the end-to-end underwriting process.

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