AWS Partner Network (APN) Blog
10 million insurance quotes per hour – How CDL and AWS are tackling the cost of living crisis
By James Craig, Partner Solutions Architect – AWS
By Nick Jackson, Partnerships Director – CDL
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| CDL |
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Insurance is a six trillion dollar industry globally, accounting for 12% of GDP in the United States. It is also one of the world’s most highly regulated industries, relying on technology providers to perform complex processes robustly at scale, particularly in sectors with high levels of automation such as online insurance retail.
In this blog we will explore how the cost of living crisis has increased pressure on this system and how CDL is leveraging the scalability and resilience of AWS to rapidly, reliably and cost effectively handle 160 million daily insurance quote requests, whilst also countering application fraud. We will focus on the UK insurance market, as one of the most advanced globally, but the topics and solutions outlined below are not limited to the UK or the insurance sector.
Since 2021, global headline inflation, which peaked at 8.8% in 2022 (IMF data), has resulted in significant financial pressure both on consumers and insurance providers, leading to rising premiums, squeezed margins and increased insurance fraud. 2023 data from the Association of British Insurers showed that motorists face rapidly escalating insurance costs. The average UK car insurance premium Q4 2023 stood at £627 GBP (€733EUR/ $799USD), up 12% on the previous quarter and 34% higher than in Q4 2022.
Figure 1: UK Car Insurance premiums compared with Global Inflation
The implications of this for insurance providers are twofold. Firstly, consumers are shopping around more than ever, as seen in the revenue increases reported by price comparison websites (PCWs) which dominate UK distribution; Moneysupermarket for example increased its insurance revenue by 28% to £220 million (€258m EUR/ $280m USD) in 2023. Secondly, fraud is on the up. The City of London Police reported a 61% rise in ‘opportunistic’ insurance fraud in the year to April 2023, encompassing both application and claims fraud.
Responding to the crisis
CDL is a leading insurtech, powering transactions across insurance and financial services, delivering innovative and resilient solutions for high volume operations. Its ecosystem provides a global insurance blueprint, with fully componentised policy administration systems (PAS) and a suite of cloud-based data and digital services available through APIs, connected hubs and platforms.
There are a number of ways in which the CDL ecosystem is supporting both consumers and insurance providers in addressing the challenges triggered by the global cost of living crisis and crucially for consumers, CDL’s pre-connected integrations with all major PCWs enables them to access a wider range of competitive quotes.
To give some insight into the scale involved, in the UK there are around 40 million vehicles requiring insurance, but the CDL ecosystem processes up to 10 million quote requests per hour at peak times. The reason? Cost conscious consumers often use multiple PCWs to compare hundreds of insurance options side by side. A single incoming quote request from a PCW is forwarded by CDL to its insurance partners, the majority of whom are intermediaries who in turn, forward the quote request to each of their insurer panel members. Major insurers feature on multiple CDL intermediary panels, meaning over 50 individual requests to each panel insurer can result from a single incoming consumer quote request, as in practice people often request multiple quotes e.g. for different cover levels, further increasing transaction volumes.
Speed and performance at scale are therefore key. CDL’s deployment on AWS has been strategically important, having migrated all existing customers to AWS between 2020 and 2022, leveraging AWS cloud capabilities to orchestrate and distribute these requests and harness the speed, reliability and elasticity of AWS services.
Orchestrating Complex Quote Workflows
Behind the scenes, CDL orchestrates an intricate workflow for each quote request:
- Quotes originate from contact center, website, and PCW channels, with PCWs representing around 80% of new business quote volumes.
- The CDL hub initially routes key details to data enrichment partners to gain additional data and risk insights.
- Insurance Intermediaries are then able to submit quote requests to their insurer panels,
- With major insurers featuring on most panels a single consumer enquiry can translate into 50+ individual intermediary quote requests to each insurer.
- Consumers routinely request multiple quotes, varying cover levels to find lower prices.
As a result, CDL’s ecosystem processes around 160 million requests daily.
Figure 2: How a single customer quote multiples to many insurer quotes
To handle such highly complex journeys, CDL’s platform needs to be performant and elastic. The majority of CDL’s applications are containerised, allowing CDL to double-down on the elasticity of AWS Fargate services running within Amazon Elastic Container Service (ECS). This allowed them to replace their fixed capacity and expensive on-premises hardware with a fleet of ECS containers, automatically scaling in and out to service unpredictable business volumes.
Additionally, PCWs place a time limit on quoting, making every second count. AWS networking services allow CDL to fine tune their routes, for example using AWS PrivateLink to connect directly to data partners on AWS, eliminating network hops and increasing the choice available to consumers.
Below is that same user request journey, showing the architecture pattern of AWS services and CDL applications.
Figure 3: How CDL uses AWS services to handle the volume of quotes
Competing on price: LV= Broker
In order to handle increasing quote volumes and provide target markets with competitive premiums, insurers require powerful, scalable and resilient rating platforms incorporating connections to a range of data enrichment and price optimisation partners.
LV = Broker switched to CDL’s Insurer Hosted Pricing (IHP) solution, on AWS, in order to enhance its control and agility, bringing the ability to update their product and pricing strategies in real-time giving brokers faster access to the latest competitive products.
“The Proteus IHP platform is flexible and scalable and will allow our broker partners to see immediate rate benefits.”
– Mike Crane, Managing Director at LV= Broker
Driving efficiency efficiency and speed: AA Insurance
After selling policies, operational efficiency is key. Handling high volumes of interactions has been enabled by a transformation to self-service, with policyholders making over 90% of requests online, ensuring convenience, speed, and the opportunity to access related products and services.
Figure 4: CDL’s Strata solution modernizes all aspects of insurance policy handling
One brand to make the move to CDL and AWS hosting is AA Insurance Services, the UK’s fastest growing motor brand in 2023, which migrated to the CDL Strata ecosystem to transform its digital capabilities and help it realise ambitious growth and efficiency targets.
With a phased programme to migrate around 2 million car and home policies from its in-house legacy system to CDL, the move gave AA access to extensive contact centre and digital capabilities to enhance the customer journey, including the CDL self-service portal, which policyholders can access via single sign-on from the AA website.
The brand also benefits from greater control of the user experience, with CDL APIs enabling it to build and maintain its own quote and buy journeys and to leverage CDL’s proactive insurance service, generating indicative quotes to cross-sell home and motor lines to existing and prospective customers.
“The key goal of establishing the CDL platform within our Insurance business, aside from enabling a great customer experience, was to provide a strong platform which enables swift exploration, innovation and delivery, coupled with efficient and effective support and maintenance. CDL provides increased opportunity for the AA to interact with our insurance customers when, where and how they choose and will be a major growth enabler moving forward.”
– Steve Martin, Programme Director at the AA
Tackling fraud: Bedford Insurance
The CDL ecosystem also provides access to sophisticated anti-fraud tools. Integration with its Hummingbird data analytics platform for example, enables suspected insurance application fraud to be identified by scanning consumer quotation activity across the marketplace in near real time, enabling pre-emptive action to combat fraud.
One CDL customer to take advantage of this is Bedford Insurance, who reported the following business impacts:
- Reduced cancellation costs by declining ‘toxic’ risks at point of quote
- Efficiency savings resulting from insights enabling more targeted post-sale validation
- Improved customer service with average policy issue period down from 43 to 18 days
- Better quality new business translating into reduced insurer loss ratios (reducing application fraud typically reduces claims fraud)
- Preferential insurer deals attracting additional new business and enabling lower premiums to be passed on to genuine consumers
“Hummingbird has enabled us to secure competitive advantage, translating into considerable business growth. By working closely with our insurer partners and sharing fraud insights, we have been able to combat online manipulation, whilst passing on savings to genuine customers.”
– Mark Hare, Managing Director at Bedford Insurance
Partnering for digital transformation
CDL is leading the way in UK insurance digital transformation, which is now business-critical, particularly as the cost of living crisis is driving consumers to generate increased quote volumes in an effort to find the cheapest deals, whilst some also try to ‘game’ the system.
CDL worked closely with AWS and utilized the benefits of the AWS Partner Network to develop solutions that customers want. CDL followed the Software Partner Path of the AWS Partner Network (APN) and having conducted Foundational Technical Reviews on their products and secured Financial Services Competency Partner status, CDL is able to give reassurance to its customers on the robust architecture of its software.
To learn more about modernizing insurance with CDL and AWS, visit our partner site or contact our team. We can arrange an introductory call to discuss your specific challenges and goals.
CDL – AWS Partner Spotlight
CDL is an AWS Advanced Technology Partner and AWS Financial Services Competency Partner that specialises in high volume online retail insurance transactions, with robust, scalable platforms and advanced data & analytics capabilities.