About the author
Lucy Alphonse, Consultant
Lucy Alphonse is a Senior Consultant at Oxbow Partners.Contact Lucy
May 10, 2021 Lucy Alphonse
Ki is a digital follow-only syndicate at Lloyd’s which uses an algorithm to support risk selection.
It was launched in May 2020 and is the first syndicate of its kind. The team states its mission is to “simplify risk and to provide brokers and clients a market that is accessible instantly, anytime, every time, from anywhere.”
Ki was incubated by Brit Insurance for 9 months. The hypothesis was that a follow-only and digital business model would enable a lower admin expense ratio and make it simpler and faster for brokers and their clients to place risk. Following a successful prototype, Ki was launched as a standalone company and secured $500m of committed capital from Blackstone and Fairfax.
Ki was built as a three-way partnership between Brit, Google Cloud, and University College London. Brit provided the insurance “know-how”, Google Cloud provided the tech stack (e.g. front-end broker portal, data & analytics, API integration), and UCL provided the underlying algorithmic science.
Ki is a fully digital syndicate and uses a broker portal – available both on the web and mobile – to collect submission information. Ki’s risk selection algorithm then automatically analyses risk, exposure, and claims data, performs checks (e.g. KYC, AML, sanctions), and generates a line size based on the individual risk and Ki’s overall portfolio. There is a maximum line size but no minimum. The entire decision-making process takes on average three seconds. Ki is a follow-only syndicate focused on a portfolio rather than class underwriting. They follow several nominated leaders (including Brit) on a class-by-class basis.
Operationally, Ki is a fully standalone syndicate and business. It even has a “digital box” in Lloyd’s consisting of self-service terminals which give brokers access to the Ki portal. The team is lean; there are currently 32 FTEs (of which c.70% are software engineers) with more on the way to support growth. The team is broadly divided into four groups:
Ki is aiming to hit $400m GWP in 2021. The longer-term plan is for Ki to be a top 10 syndicate (by GWP) in the next two years.
There is a lot of noise in the market around Ki and rightly so. They are leading the charge in Lloyd’s on several fronts.
That Ki is at the forefront of several areas of market innovation is perhaps unsurprising. Ki is backed by market heavyweight Brit which is one of the largest Managing Agents in Lloyd’s. Brit have both the investment appetite & broker relationships (both a seat at as well as clout around the table) to pursue innovative propositions.
There are two takeaways for Managing Agents from the Ki case study.
1. Ki is currently one fish in a large pond. Our estimates put the addressable follow market in Lloyd’s at £16bn and the algorithmic follow-market at £12bn. Ki’s Y1 target of $400m is therefore a drop in what is potentially a huge market opportunity. From inception to “go-live” Ki took around 1 year so Managing Agents need to act now to set themselves up to capture this opportunity.
2. Operational efficiency is more than headcount cutting. The follow-only model allows a leaner and cheaper operation. At Ki the traditional “underwriting” function seen in other syndicates is non-existent in favour of a much leaner portfolio management function. To truly be operationally efficient, Managing Agents need to rethink entire business & operating models.
Oxbow Partners helps clients across Lloyd’s and the London Market with topics such as lead / follow, digital distribution, and algorithmic risk selection. If you’re interested in any of these areas or even just how you should respond to the Future at Lloyd’s, get in touch here.