London Market Crisis: 89% of Insurers Lose Business Due to Slow Legacy Systems

A significant majority of London Market insurance organisations admit their legacy core systems are incapable of supporting future AI and underwriting requirements. New research indicates that 76% of firms face a critical execution gap, while nearly 90% have lost business to faster competitors, highlighting a growing disconnect between digital ambition and technical infrastructure.

What was announced

The research report, titled The London Insurance Market's Execution Gap: AI Ambition and Core Technology, surveyed 245 professionals across Lloyd's managing agents, company market insurers, managing general agents (MGAs), reinsurers, and brokers. The findings reveal that while 58% of respondents already use AI in production, only 24% believe that incremental upgrades to their existing core systems will be sufficient to meet future needs.

Operational speed is a primary concern for the sector; 89% of those surveyed reported losing business to a competitor in the past 12 months due to sluggish processes. The barriers to modernisation are deeply rooted in the London Market’s structural complexity, led by the requirements of subscription and multi-party underwriting (43%) and the presence of multiple systems across the policy lifecycle (42%). Furthermore, 38% of professionals reported difficulty connecting their core systems with broker, bureau, or settlement processes.

The study also highlights a lag in strategic agility. For 42% of respondents, changes to underwriting strategy take weeks or longer to reach day-to-day decision-making. This delay correlates directly with financial impact: reported losses rise from 59% for organisations that implement changes immediately to 100% for those taking a month or longer. Consequently, faster quotes and broker responsiveness were cited as the top priorities for modernisation (36%), followed by improving underwriting margins (26%) and scaling premium without increasing headcount (25%).

The companies involved

Federato provides an AI-native core system designed to span the full policy lifecycle, positioning itself as an independent alternative to legacy technology providers. The company’s platform is built to replace traditional policy administration systems (PAS) by embedding AI capabilities directly into the insurer’s workflow rather than treating them as external additions. This "agentic AI" approach is designed to conduct complex analyses, allowing human underwriters at carriers and MGAs to focus on nuanced risk assessment and broker relationships.

Led by CEO and Founder Will Ross, Federato focuses on enabling better business outcomes by addressing the specific frictions found in complex insurance markets. The firm’s technology aims to bridge the gap between high-level portfolio strategy and individual underwriting actions, a common pain point for firms managing diverse risks. By providing a unified platform, Federato seeks to help insurers overcome the data silos and connectivity issues that frequently plague the London Market’s subscription-based model and multi-party settlement processes.

What FF News has reported before

FF News has closely followed Federato’s growth and its impact on the global insurance technology landscape. The company was recently named to the CB Insights Insurtech 50 as a core system disruptor, reflecting its rising profile in the sector. In mid-2026, the firm expanded its global footprint by launching a Sydney office to serve the APAC region, led by a former Guidewire executive.

The company has also been active in addressing the broader data challenges facing the industry. Earlier research from the firm highlighted a 64-point gap in P&C insurance portfolio control and AI integration. To further unify the insurance value chain, Federato launched AI-native claims management in August 2026, aimed at closing the feedback loop between claims data and underwriting decisions.

What this means from an insurtech perspective

This data signals a critical turning point for legacy core-system vendors. In the London Market, where subscription underwriting adds layers of complexity, the "bolt-on" AI approach is clearly failing to deliver the operational speed required to maintain market share. Carriers and MGAs are under immense pressure from brokers who demand near-instant responsiveness; if legacy systems cannot bridge the gap between strategy and execution, the industry will likely see a rapid migration toward AI-native platforms. The real losers in this shift are incumbent vendors who rely on incremental updates, as the market moves toward autonomous underwriting to protect margins and improve loss ratios.