Almost every day in London's Square Mile, brokers clutching bulky folders stuffed with paper documents and files criss-cross the busy streets en route to one of the city's insurance markets to discuss policies for their commercial clients.
As technology-fuelled disruption has swept through the rest of the global financial sector, it has so far largely bypassed commercial insurance, leaving many of the biggest companies in London, Singapore, Bermuda and other global insurance centres conducting aspects of their business in much the same way as they have done for decades.
Yet all that could soon change: according to Strategy&, PwC’s strategy consulting house, insurance is ripe for disruption – in line with areas such as retail banking, small business lending, and savings and investments for mass affluent customers.
For commercial lines insurance, which covers everything from buildings to satellites and even kidnap and ransom for company executives and their families, many clients struggle with inefficient insurance distribution and servicing. They are also underserved: Strategy& found that only 16% of European small- and medium-sized companies (SMEs) were covered for cyber threats, while 18% did not have liability cover.
"Insurance is at a different point on the disruption curve compared with banking or other financial services," says Christine Korwin-Szymanowska, Strategy& partner. "But it is next on the list."
Strategy& estimates that in the UK, commercial lines insurance alone could account for almost a third of the total annual value of disruption taking place in financial services, which it estimates will be worth about £100bn a year by 2030.
Commercial lines insurance has long enjoyed high margins and strong barriers to entry thanks in large part to its inherently complex nature.
This has reduced the need for reform, allowing insurers to continue operating even as they put off becoming more efficient. Today, transferring a risk reportedly can eat up to 40 per cent of the premium paid at Lloyd's.