With over 120 London Insurance Market Clients, we spend a lot of time meeting brokers and underwriters to learn about new market issues that arise. One of the key items that keeps coming up are the attritional losses that could be avoided with the right solutions to support tighter underwriting controls and a better understanding of the policies being subscribed to.
There are two forms of contracts that Insurers need to track, the Market Reform Contract (MRC) that Lloyd's Brokers prepare and the Insurance Companies' own "paper".
To manually check every MRC and ensure the correct endorsements have been included across a complex placement programme, is onerous and mistakes are frequently being made. We know of examples where an endorsement was "dropped" at renewal and a cyber loss occurred that resulted in a multi-million-dollar payment, when it should have been excluded. Performing quality assurance checks on all MRCs via a configurable rule driven platform that clearly identifies mistakes and omissions, provides a powerful safety net for the documents that are created elsewhere.
When writing multiple layers of a complex placement, or at renewal, using a platform that supports multiple document-formats and that rapidly compares documents for inconsistencies and differences, provides another powerful safety net, to avoid costly mistakes.
When generating quotes and policies for complex risks, insurers need a consistent and compliant solution for creating their binding documents. Ensuring all departments and geographies are protecting the company with the latest and correct endorsements is only possible with a modern platform which includes document generation and a built-in parameterised clause library.
That’s why you should follow the three crucial "Pillars of Protection" to Insurers: identify, compare and create - ensuring only intended coverages are provided and costly mistakes are avoided.
The 3 Steps to Protect Insurers
Step 1: Identify
With the help of artificial intelligence, it’s possible to automatically extract data that will allow companies to identify and analyse all of their contracts. Companies must transform their contracts into data to fully understand every aspect to gain full insight into all terms. During this stage underwriters should be analysing every policy and identifying those without the necessary cyber exclusions, without artificial intelligence this process can be long and tedious. The automated method gives insurers the extra time to analyse and review documents. The benefits of increased revenue, controlled costs, and minimised risks will give companies more freedom to pay attention to other challenges and spend money on more pressing issues. Early identification will aid unintended mistakes and provide an adequate level of protection.
Step 2: Compare
How do you confirm every contract is high quality? Manual checking can take up hours that can be focused on various other obligations. Your best option is finding a tool that compares all contracts to ensure that legal terms are error-free. The features of search tools, annotation, and check lists guarantee a speedy and efficient reviewable session. The comparison of multiple documents certifies accuracy and identifies any differences. During a contract renewal, it is crucial that all cyber exclusions are added, and all dropped clauses are spotted. A designated library is set for clauses to be scanned and automatically tagged if there are any adjustments made. The comparison of multiple documents for inconsistencies shields contracts from any possible unwanted errors.
Step 3: Create
We can all agree that it can take hours to draft a contract. If you’re not currently using a document automation tool, then it might be time to invest in one. With an automated system each contract is taken on an interview that seamlessly guides underwriters through smart templates. On this journey, all necessary questions will be asked, while topics are instinctively grouped. Thus, allowing the software to produce a contract in record time. Cyber exposure can creep on any enterprise without the right protection. For insurers it is important to make sure that a cyber exclusion clause is included in every policy. With a secure and consistent creation solution, insurers can make certain they are protected.