Ki's Allan: "New wave of digitisation" across lead and follow markets

By Rebecca Delaney

Jan 27 - (The Insurer) - The application of AI in the (re)insurance industry is set to “usher in a new wave of digitisation”, particularly as changing market conditions in commercial lines bring greater scrutiny around cost and efficiency, according to Ki CEO Mark Allan.

Speaking at ITC London on Monday, Allan underlined the potential offered by AI technologies across the sector, with Ki currently testing large language models in "human in the loop" use cases.

“I'm hugely excited about AI. To me, especially in our sector where very complex data is often unstructured and very difficult to ingest through models, I think the technology we've got now really should usher in a new wave of digitisation,” he said.

“The large language models are very good, and we're well on our way to using them in our system. We're using it today in more human in the loop-type use cases, given some of the concerns around accuracy and the potential for misreads by the AI. So we're using it safely, but I'm really excited about that as a theme.”

Allan noted that the increasing adoption of AI and other transformative technologies will also be informed by changing market conditions, particularly in commercial lines which have enjoyed several recent years of profitability.

“We're seeing a bit more competitive pressure in the cycle. Interestingly, I think that's going to drive more digitisation as well because we're now coming under a bit of cost pressure,” said Allan.

“The last three, four years, people have had a free ride. The next few years are going to be much more challenging, there's going to be a lot more focus on cost. We're just at the right point in time for digital to be a real enabler of change in that part of the cycle.”

He acknowledged that Ki’s journey from a start-up to topping $1bn in premiums in four years was helped in part by launching at an opportune time during the pandemic, when many players were looking to “work without paper” for the first time.

“Our partnerships in the first year from a standing start meant that we were able to get capital, get access to the market and to launch, frankly, in a very, very short period of time,” Allan said.

“I think we had a bit of luck as well. Timing is everything. 2021 and 2022 were very good years for Lloyd's, we had a market where new capacity was needed, and we were able to grow and scale quickly.”

Ki launched to target the follow market, which had been identified as the market at Lloyd’s that was most “ready for change”.

Many of the data points for the follow part of a large, complex placement could be determined in a more digital and algorithmic manner, including the structure, price and main terms of a risk.

“The market that seemed most apparent to us to be ready for change was the follow market in Lloyd's. Interestingly, the brokers spent almost as much time gathering the first 60-70 percent of the capacity they needed. For us, that was a really big opportunity to disrupt,” said Allan.

He added that although Ki had expected competitors to emerge utilising a similar business model, this had not materialised by 2023, which led the syndicate to pivot towards building more relationships and adding more carriers to its platform.

Earlier this month, Ki completed its separation from its former parent Brit to become a standalone company within the Fairfax group. Going forward, Allan said the firm is eyeing opportunities for digitalisation and AI beyond the follow market at Lloyd’s.

“We're a follower, but I think leaders also will now get better tools to digitise their business, and we can see some great examples in our market where people are embracing the change,” he concluded.

“If you look more broadly, whether it's climate, cyber risk, geopolitical tensions, there's a huge amount of risk out there, and we're doing an invaluable role in helping businesses to navigate that risk. We need the data and the technology to understand that risk – if we get that right, we can perform that role out there in the world.”