Bridging troubled waters

He’s been likened to a storm-trooper for his dogged determination to see a goal through and Phillip ‘don’t call me Phil’ Bell certainly lives up to this comparison on all counts.

Chief executive of Open GI by day, dad to three girls by night and Shakespeare connoisseur whenever he gets the chance, Bell has been the powerhouse behind software provider Open GI, which has just clocked up its first anniversary, having been known as Misys for eight years.

When Bell joined Misys, it was the biggest player in the insurance software market – and its troubles were being splashed across the pages of three out of five periodicals.

“There was the sense that it had gone past its sell-by date. Trying to fix your company while it was on the front page of three out of five periodicals is challenging,” says Bell.

The other flare-up surrounded the controversial management buy out (MBO) last March when six senior staff walked out over a period of five months. This was, among other theories, attributed to Open GI ceasing to use OASys and instead revert to its older system, Brooms.

The matter was misunderstood, says Bell. “There was a wave in the industry where there was a perceived demand for Microsoft technology which proved to be quite expensive for brokers.

“There were a minimal number of users of OASys back office – fewer than 20 – compared to 1,000 who had returned to using our core system.”

Today, 13 of these 20 have already converted to Brooms (which is now referred to as ‘core system’), and the remaining are in the process of doing so.

Criticism that the core system is archaic are met with a knowing smile, clearly a topic Bell is familiar with. “The core system fronted by the new-look Open-i interface has 28 years of development behind it. It is immensely rich and powerful in the things it can do and is structurally cheaper,” says Bell.

Open-i is still in the roll-out phase six months after its launch. To date, 200 brokers are contracted. A coup for Open GI was securing Towergate last November which saw 1,100 users coming on board.

Bell expects 90% of Open GI’s clients to be using Open-i within the next two years. While not without bugs, he says that the controlled deployment has been “remarkably stress free”.

The software house will relaunch an Imarket integrated product set in the next few weeks to drive uptake among brokers.

It has secured four lines of business with at least three insurers against each, which Bell says have been “system tested and live tested”.

The Commercial Combined line has been assigned to Norwich Union, Allianz and Zurich while Tradesman goes to Groupama with plans to integrate with Norwich Union, AXA and Allianz by June.

The Shops and Office lines are assigned to AXA and Groupama with Norwich Union, Allianz, Royal & Sun Alliance and Zurich integrating in May.

While Bell champions Open GI as big supporters of Imarket, and is keen to adopt the platform’s standards, he is pragmatic about its future. “If it doesn’t succeed, there will be other methods to incorporate Imarket. Our brokers are not solely dependent on it,” he says.

The trend over the past decade, and increasingly so in the past five years is that there are fewer brokers and fewer insurers in the UK.

“Ten years ago there were 17 different insurers that made up 50% of the market; now five make up 60% of the underwriting market. Then, there were about 10,000 brokers now there are roughly 6,000,” says Bell.

He anticipates that the number of broker customers will continue to decline, but the number of users of Open GI’s systems and the volume of activity will increase.

Of the estimated £30bn capacity in the UK market, excluding Lloyd’s, 20% is generated by customers who utilise Open GI systems.

“A year ago £6bn of gross written premium (GWP) was channelled through our system. Now that figure is £7bn,” says Bell.

The Lloyd’s market itself does £16bn of GWP of which it is estimated £9bn relates to the UK and Open GI has already dipped its finger in the proverbial pie by acquiring Mi last November.

“I believe there is massive potential for connectivity between regional brokers and the London and Lloyd’s market. Marsh, Willis and Aon are now committed to expanding their footprint in the UK. A majority of that expansion has to do with interacting with regional brokers. In turn, regional brokers have a desire to access the Lloyd’s underwriting capacities,” explains Bell.

Mi will provide an electronic bridge into the Lloyd’s and London market via the internet trading platform technology acquired through the purchase of Mi.

What does Open GI hope to get out of his partnership? Bell projects transaction charges could potentially earn the software house six-figure sums in five years.

Unlike its competitors SSP and Sirius which have expanded into other markets, Open GI has no intention to move into providing back office systems for insurers.

“We only provide systems on behalf of brokers. There is so much opportunity and change within the broker space, anything else would be a distraction and dilution of our core strengths.”

Bell sees consolidation of software houses as driven by financial ruin. “It is fairly obvious that some of our competitors are struggling.”

As for new entrants to the software market, barriers to entry are “immense” due to the functionality of software, he says. “More importantly, brokers rarely change systems because of the hassle of doing so. They change rarely and reluctantly.”

Bell expressed an intention to take over rival software houses in his plans for Open GI to become a major player in the market although he declined to name the potential target.

“The company we acquire will demonstrate market strength and enjoy a sizeable client base. We won’t be acquiring software.

“The perception is that another software house is better than Open GI. My perception is we have more than leap-frogged the competition over the functionality of software. Therefore we are not interested in the functionality of another software house’s products.”

And he adds: “It is an interesting time to be in the industry because there is real advent in internet trading and the e-trading of commercial lines. Software houses and insurers are working together to transform a part of the industry that has been paper-based for many years. Open GI is a big part of that.”

About 1% of the £14bn commercial line is traded electronically today. Bell forecasts that this will increase to 80% in the next five to10 years.

Open GI is participating in the deployment of computer telephony interface (CTI). “It is immensely fast-moving and complicated, linking broker to broker, and broker to consumer.

“Competition with insurers is fierce, aggregators and sub-aggregators are commonplace and a whole industry is being built around call forwarding and CTI.

“We’re working with some of our larger call centre brokers to finalise the development of an integrated telephony solution,” says Bell.

Open GI is also working with larger call centre brokers to provide e-trading platforms that link to aggregators.

“For some brokers it would be difficult to trade on the internet without aggregators. We’ve just taken some major contracts from big internet brokers on the basis of the work we’re doing with e-commerce.”