November 2, 2021 James Tribe
In our latest interview with an insurance technology executive James Tribe, Content Manager for Magellan™, caught up with Nicholas Thurlow, Co-Founder at Markit Systems. They discuss the different approaches to building ‘CoreTech’, the problems faced by London Market MGAs and what Markit Systems has planned for the future.
James: Tell us what Markit Systems do in a sentence.
Nicholas: In a sentence, we design and deliver-class leading tech to allow MGAs and insurers to operate in a digital, connected environment. We provide a core solution, Markit Core, built around key modules such as Quote & Bind, documentation, reporting etc., that is applicable across class and jurisdiction. Right now we have around fifty products live in four continents. A great deal of our work either focuses on or involves the complex requirements of the London Market.
Markit was founded initially to provide for the needs of MGAs and delegated authorities, which have traditionally been underserved with dedicated tech. For the first three years after our founding in 2015, we expected that clients would want to tailor each of our key modules. But after trying that method, we found that clients simply don’t have the internal resource to either a) initially specify how to use these modules, or b) to manage and configure them day to day once they go live. This is why we combined the modules into Markit Core, a complete solution that is 80-90% configurable out of the box.
James: You mentioned both MGAs and insurers. Who is your ideal customer?
Nicholas: There are three major areas of focus for us, all closely tied to the MGA/Delegated Authority model:
In all three cases, Markit Core is a system that allows the client to configure their workflows, manage and respond to their brokers faster and more effectively, and process risk faster overall. Markit Core delivers all the ‘must-have’ functionality you would expect from a core system and most of the ‘nice-to-haves’ as well. I should be very open here that we want to select the ‘right’ businesses to work with as we know there are some things we don’t want to do. We don’t want to replace reporting tools like PowerBI, or bordereaux ingestion tools, for example. And we don’t claim that we can make a bad MGA good, but we can certainly make a good MGA better!
James: How do you differentiate yourself from other core systems providers for MGAs?
Nicholas: Firstly, we design outstanding tech that does what it says on the tin. Secondly, we have a deep knowledge of how the London Market system works. Many of our team have had first-hand experience of the London Market, and two of our co-founders had already established an MGA that became a Lloyd’s syndicate. Technology is replicable, but you simply can’t replicate hands-on experience in the market.
This comes through again and again in our work with clients. For example, we helped to set up a reinsurance MGA with niche accounting requirements in 5-6 weeks during lockdown last year. That could never have happened without the granular, detailed knowledge of reinsurance accounting and reconciliation processes in our team. In another example, we worked with a South African platform supported by local paper and London Market capacity, so sitting in two different tax regimes.
As these examples demonstrate, you need someone in the team who can flex to these ‘except-when’ scenarios, because every client will have at least one ‘except-when’. The software alone can’t provide that. We see this reflected in the fact clients who are labelled InsurTechs, who have built impressive front-end systems, look to us to provide the back-end administration. This side is less ‘glitzy’ and more technical, which is why we think it’s so important to look for a back-end that does what it says on the tin and is maintained by a team with deep experience in the industry.
To summarise, we see the London Market as unique in how it underwrites complex, non-standard risk. Our strength is in understanding how this market operates and building a technology that can transact on these risks more efficiently.
James: There are so many different approaches to building so-called ‘CoreTech’ now – turnkey systems, modular platforms, low-code builders and of course building in-house. Could you give us your thoughts on how you assess these different approaches, and where Markit fits in?
Nicholas: Everyone knows the biggest challenges in the London Market are a lack of system compatibility and the difficulty of accessing user data. Many and varied attempts to address this have all failed. Today, I think people are much more on board with the open architecture approach, so these new approaches to building core software are becoming viable.
With that said, no/low-code solutions can be difficult to implement for MGAs. Firstly, there are a host of compliance issues that a low-code ‘builder’ on the MGA side has to deal with. Many MGAs may also lack the resources to justify no/low code or highly modular builds. Think about some USA brokers that are still working with truly antiquated information sharing methods; almost by horse and cart!
All of this comes back to the practical reality that MGAs prefer to focus on underwriting than configuring systems. Does every MGA really need a system that can allow testing new products in the market every few weeks, for example? Tech-centric MGAs are still a small part of the insurance cake: seamless hygiene and functionality, scalability, and the ability to improve efficiencies are what the majority are looking for.
James: What can existing clients look forward to from you in the future?
Nicholas: We already cover all the must-have features and most of the nice-to-haves. We got there by prioritising regular client feedback, which in practice usually means that if we hear about a need more than twice, we investigate. In the short term, there’ll be more development, more listening with our ears to the ground and seeing what we can take out of that feedback.
In the longer term and despite being functionality-rich, like all technology businesses, we still have a road map or wish-list of improvements. We plan to increase the number of pre-configured APIs, such as further integration with generic third party accounting software and enhance functionality in the growing sector of reinsurance MGAs.
We will also continue to review and refine onboarding a new client; aiming both to improve the configuration process for MGAs, who often find themselves resource-poor, and where possible reduce delivery time.
Ultimately, our goal is for all clients to do “More Business Better” and this is best demonstrated by a recent ROI study by one of our MGAs. This showed it has been able to grow its bottom line and its lines of business by 40% without incurring the additional cost associated with increasing its headcount.
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Our recent blog on the InsurTech space in 2030 presented views from InsurTechs that ran the gamut of innovation trends and envisioned a ‘brave new world’ of insurance. In stark contrast to this picture, our conversation with Markit Systems revolved around the problems that many London Market MGAs will be familiar with. These include a lack of IT resource, organisational structures not intended for multi-departmental tech-led restructures, and the challenge of ‘except-when’ scenarios that can be deceptively thorny: especially for industry outsiders.
We stated in our previous InsurTech Impact 25 report that it was imperative for insurers to “think of technology vendors as accelerators and enhancers… not just innovation”. What we like about Nicholas’ approach is its focus on doing “what it says on the tin” – enhancing and accelerating business objectives the MGA already has in place, rather than looking to innovation as a substitute for internal tech best-practice. Throughout the interview, Nicholas resisted making bold declarations about glitzy front ends or cutting-edge features. Instead, he emphasised the practical necessities of London Market core systems tech: “functionality, scalability, and the ability to improve efficiencies”, alongside the ‘human factor’ of a knowledgeable team of insurance experts.
It’s a huge advantage to work with a team who are equipped with the insurance know-how to respond to these surprises. When making tech selections, insurers should interrogate the depth of expertise and vendor ways of working as much as the platform, asking: “Is this a team I want to partner with for the next decade?” Nicholas’ approach in our interview was practical, honest and unpretentious, which we believe is the perfect starting point for a conversation to go further.
About the author
James Tribe, Content Manager - Magellan
James manages the content and data for Oxbow Partners’ insurance technology navigator, Magellan. He has previously worked in a similar role building a database of high growth UK start-ups. James has a first class degree in English Literature from the University of Exeter.
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