covered | July 2021 | Commercial

Polaris and insurance standards

The Standards evolution and what to expect next in digital trading

Steve Waller, Head of Standards at Polaris, breaks down its Standards, discussing their importance in digital trading today and what the industry can expect next.

Standards are essentially an agreed way of doing something. They exist in many different industries and form part of our lives often without our noticing – they can be anything from the electricity we use, the food we eat, even the beaches we might visit.

Typically, standards are developed by individuals representing organisations operating in that sector. They do this alongside their day jobs, with a view to making their sector operate more effectively, provide better consumer protection or to make better use of scarce resources. They are developed by consensus, and their implementation can be backed up by regulation or done voluntarily.

In the UK general insurance industry, we, Polaris, act as the Standards body for digital trading. Owned by the insurance industry, we recently celebrated our 25th birthday however, the Standards pre-date us, emerging as they did from a unit operating within the Association of British Insurers (ABI).

What are Standards in insurance?
Standards are used in the build and distribution of digital insurance products to allow data to be sent consistently between insurers, software houses and others. They include quotations, renewals, cancellations, and mid-term adjustments.

Subscribers to the Polaris Standards (personal lines, commercial lines, or both) come from all areas of the insurance industry – insurers, software houses, brokers, MGAs, insurtechs, price comparison sites and industry bodies such as BIBA, MIB and Thatcham. Representatives from these organisations help us to shape the Standards and ensure they are kept up to date and reflect changes in trading practice, new regulations, and legislation.

Underpinning the messaging standards are the codelists. Polaris manage in excess of 350 codelists, covering over 35,000 individual values. Codelists cover all the factors that an insurer will need to determine if they wish to offer cover, and if so what terms and premium should apply. It can be as simple as the person’s title, details of wall construction, modifications on a vehicle through to prior claims and convictions that may have happened. The codelists are essential for enabling a consistent presentation of risks from customers to brokers to insurers.

How are the Standards agreed?

For both our personal and commercial lines subscribers Polaris run regular and well-attended forums. Representatives from all areas of the industry discuss anything that is relevant to the way that the products are traded. The Standards are then updated to reflect the consensus agreed upon. For example, in early 2020 we added occupations relating to internet trading and made changes to reflect the gig economy.

This is the real value of the Standards, and where the input from our subscriber base makes such a difference to the output. Through thoughtful debate on the changes proposed, we consider points such as:

• Is it clear and unambiguous?
• Could it breach any laws or regulations or treat customers unfairly?
• Is it something a proposer could reasonably be expected to know?
• Is it reasonable to ask, or could the insurer obtain the information from other sources (such as data enrichment)?

The combined knowledge and experience of our subscribers input into these discussions helps to make the Standards relevant and current. It is then up to individual trading partners to decide when implementation should take place.

Are Standards still relevant?
I would strongly argue that they are. A lot of time and effort collaborating with the industry goes into continuously developing the Standards to make sure they are fit for purpose, in line with industry changes, and provide longevity for digital trading in the UK general insurance industry.

It is possible individual organisations could develop their own way of transmitting data without reference to any form of standard. However, this would only be serviceable where the participants are a closed community that is not intended to expand.

The reason being, any time a further organisation joins that community, they and the existing members would need to ensure their means of communicating data is fit for purpose. These further organisations would end up having multiple bespoke arrangements to manage the communities in which they participate, creating significant management overhead, along with all the other aspects to consider when launching a new product, and increased cost.

In addition, creating a set of data capture questions and options from scratch is time consuming and likely to broadly mirror the market standards that already exist and can be plugged in immediately.

What’s next for Standards?

The Standards are not static. There are always changes taking place in society and insurance needs that accompany this. It remains to be seen what the lasting effects of Covid-19 and its impact on home working will be, for example.

Whilst Standards that support digital trading are never going to fit every conceivable risk, there is a significant demand from the market that we deal with to extend their digital trading footprint. Covid-19 has seen examples of businesses diversifying to survive, and the impact of major events such as Grenfell prompted insurers to review more thoroughly the information requested at underwriting stage leading to changes to standards. As a result, Standards that underpin question sets used to cater for customers’ insurances will need to change to support the changing landscape of the industry.

With regards to question sets, we are currently working with all commercial SME trading platforms to ensure the question set and data capture for Property Owners is updated this August. We are doing this to bring the product in line with the latest requirements from insurers so they can support your SME clients more effectively. As we continue to conduct reviews of all our question sets, you will receive further details of any planned changes that could affect other business lines which you transact on Open GI’s commercial SME trading platform.

Polaris welcomes more broker input when developing Standards. If you’d like to be involved, or find out more, please contact Steve Waller.

Email Steve Waller

For information on the changes to Open GI’s Commercial SME Property Owners, please contact your OGI Account Manager.

Email Open GI