It's the most frequent question I've been asking my
Lloyd's and London market clients since the turn of the
The question itself is testimony to the extent of work that the
market has undertaken to design, implement and embed conduct
frameworks over the last few years, particularly in relation to
delegated authority business. These relatively new frameworks have
been working in practice for long enough for the conversation to
move towards efficiency and evolution.
It is important that firms now think about how to advance their
frameworks to do more of what mitigates actual conduct risk through
providing value, insight and assurance, and do less activities that
are time consuming and not adding value.
What needs to evolve within conduct frameworks?
I set out below some of the challenges Lloyd's and London
market insurers currently have that require a more value-add and
Overcoming these challenges is important for conduct frameworks
to become fully embedded and add value to firms. This soft market
only increases the need for these frameworks to be efficient,
streamlined and targeted given the current focus on cost and
Role of technology in driving efficiency
A straight forward solution to remove cost and increase
efficiency in conduct risk, as well as delegated authority
management more broadly, is through the use of technology.
We have created DART, our Delegated Authority Risk Tool which is
an online technology solution for insurance companies to undertake
the end to end delegated authority framework, including conduct
risk. From underwriters undertaking risk assessments on their
tablets at the box, to the automated generation of targeted due
diligence scopes and the analysis of dynamic MI. This solution is
being deployed in the market and the efficiency and cost gains are
Another option is technology solutions that harness Artificial
Intelligence, which can undertake a review of 100s of wordings
While technology shouldn't be pursued for technology's
sake, there are pinch points where technology can allow insurance
companies to really advance – whether to become more
efficient or gain competitive advantage, or both.
Going back to my opening question – when I ask my
clients "Is your conduct framework adding enough
value?"– I'm reassured to hear some great examples.
Such as Coverholders where actual conduct risk was identified and
mitigated, where products were changed to be fairer to customers,
or commercial advantage gained due to the ability to manage high
conduct risk business.
However, there are just as many examples of inefficiency which
should now be addressed. Not least because it appears that
financial crime frameworks are now being scrutinised in light of
enhancements to conduct frameworks, and the question is quickly
becoming "why aren't you doing financial crime risk
assessments like your conduct risk assessments?"
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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