Aon trading platform supports fronted or collateralized reinsurance

by Artemis on April 5, 2016

A new global reinsurance trading platform will be launched by reinsurance broker Aon Benfield on April 11th 2016. ABConnect Placements will also benefit and support alternative capital and ILS market participants that allocate capital to traditional reinsurance on a fronted and collateralized basis.

AbConnect Placements will be up and running for the July 1st reinsurance renewals, with Aon Benfield aiming to offer an “integrated, streamlined and documented process for global treaty reinsurance transactions.”

The firm hopes that the launch of ABConnect Placements will provide its clients with real-time data and metrics on their reinsurance placements, thanks to enhanced collaboration between Aon Benfield’s reinsurers and brokers.

Underwriters can use the platform to track their reinsurance placements progress and manage access to opportunities across Aon Benfield. In this way reinsurers can perhaps be more proactive, using the platform to ensure they are plugged into the latest opportunities that come to market through the broker.

Using technology to make the reinsurance placement process more efficient is clearly the goal for Aon Benfield, alongside the collection of data which will be invaluable to itself and its clients or partners in the future.

Given the reach of Aon Benfield’s brokerage in the reinsurance market, the platform will contain information on a significant proportion of the world’s reinsurance placements, as well as on the cedents and the ultimate reinsurance underwriters. That data will enable Aon to be more efficient across its organisation, as well as to provide data back to clients.

Aon Benfield told Artemis that the source of the capital backing the reinsurance will not matter and that ABConnect Placements will support both fronted or collateralized reinsurance participation, so enabling ILS fund managers to leverage the benefits of the platform as well, through their fronting relationships or their own collateralized reinsurance vehicles.

“ABConnect Placements is designed to work with counterparties participating on a more traditional basis, whether fronted or collateralized,” an Aon Benfield spokesperson told Artemis.

However the platform has not been designed to support placement of other ILS structures to date, meaning that; “Alternative markets providing capital that supports Insurance Linked Securities (such as Cat Bonds, Industry Loss Warranties, Sidecars, etc.) will not be accessing Aon Benfield business through ABConnect Placements.”

Michael Moran, Chief Operating Officer of Aon Benfield, commented on the launch; “Collaborating with our reinsurer partners through this next generation platform will result in more real time information to share with clients and enable them to make more informed placement decisions. We conducted a global pilot with reinsurers during the 1 January renewal that has helped to shape the process and create a streamlined and efficient trading platform.”

The platform will enable reinsurance underwriters, traditional, fronted or collateralized, to download submission packages, documentation and data files. Enter quotes with terms and conditions updated in real time, view firm order terms and enter their authorised line sizes.

In essence this piece of insurance technology (insurtech) is going to make Aon Benfield’s own internal processes more efficient, its clients reinsurance placements more efficient, and reinsurers deployment of capital more efficient.

Given the percentage of global reinsurance market placements that will pass through the ABConnect Placements platform will be significant, it can only help to make underwriters lives easier, as it brings placement opportunities to them in an automated manner.

It’s not groundbreaking or particularly radical in terms of how it seeks to disrupt the market, but it is a step towards a new paradigm where brokers are adding value in ways outside of the traditional person to person renewal relationship cycle.

As others seek to disrupt the risk to capital value chain more radically, brokers need to respond. Aon Benfield is clearly doing so with the launch of a platform that helps not just the broker, but its clients and partners too.

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