Akinova looks to standardisation of ILS risk transfer with ACORD

Akinova, the start-up aiming to launch a platform or marketplace for the transfer and trading of insurance and reinsurance risks, has donated some of its data assets related to ILS to global standards-setting body ACORD.

The aim is to showcase standardised insurance-linked securities (ILS) related assets more broadly to the insurance and reinsurance market through the industry-backed ACORD community and services.

Akinova said that the ILS assets it has donated, which include data definitions and collection mechanisms related to both cyber and catastrophe risk transfer, will be made available to ACORD members as part of the ACORD Data Standards and Architecture.

Standardisation can be a contentious topic in insurance and reinsurance.

Some call for it, knowing there is a need for risks and transactions to achieve greater levels of standardisation inn order to enhance the efficiency of the market, the efficiency of capital and the efficiency of the transfer of risk.

While at the same time, others pursue customisation, complexity, unstandardised data formats as this can often provide the competitive edge that sustains them.

As a result the industry has been seen in the past to bifurcate and segment itself into industry-backed support groups, which tend to be created for the benefits of specific market segments or specific market members.

As a result driving standardisation through the risk, insurance and reinsurance industry can be a significant challenge. One ACORD itself has battled through and against for many years.

Akinova said that in addition to the data assets it has also donated some regulator-approved sample contracts and policies which ACORD can use to further the development of its Global Reinsurance and Large Commercial Standards.

Among these is a modularised contract structure and summary of all key price-relevant variables for transactions Akinova is designing its marketplace to be able to support.

The assets donated were developed during Akinova’s creation of its tech based risk platform or marketplace, which remains in development and as yet has not hosted or facilitated any transactions that we are aware of.

The contribution of new assets to ACORD may benefit that organisation’s thinking around insurance-linked securities (ILS) forms of risk transfer, while promoting Akinova’s developing proposition.

“In the global insurance ecosystem, standardized data exchange is, and will continue to be, a key enabler of material growth across all lines of business,” commented ACORD President and CEO Bill Pieroni. “We were impressed to see that AkinovA truly understands that standards are key to support sustainable, profitable growth. Their efforts to enable a secondary market to trade risk, and to handle more dynamic emerging lines – such as cyber- and climate-related risk – will benefit our members and the clients they serve.”

“While the industry will always have a need to support bespoke contracts, we can also encourage the use of standard protection instruments by making them more accessible and cost-efficient,” said AkinovA Co-founder and CEO Henri Winand. “As a trusted, non-threatening, third-party infrastructure provider to all those who wish to use it, we have been able to rapidly iterate and integrate feedback from a range of competitors happy to share information with us.”

“AkinovA invested significant time and legal effort to integrate content and feedback from members of its growing network. This included working closely with members of AkinovA’s unique Ecosystem of Founding Partners programme, members of its Advisory Board, Industry Advisory Board and broader industry support from brokers, re/insurers, actuaries and law firms,” continued Winand. “Over time, AkinovA expects this library of standard protection instruments to grow to other lines of business across the insurance linked securities market and beyond. This is the start of an exciting journey.”

Of course, while standardisation is a noble cause and much-needed across insurance, reinsurance and also ILS, it’s also a tough thing to drive through.

There’s no guarantee industry will adopt any standard and, when developed by a single party standards can become more widely questioned as a result. It will also be important to see uptake and traction of Akinova’s eventual product offering to show whether the industry accepts its take on standardised data assets and contracts.

But efforts to standardised are required and it’s encouraging to see them discussed and pursued.

Over the years tracking the development of the ILS industry and reinsurance in general, I’ve seen numerous attempts (been involved in a few) and often the market participants are split as to their usefulness.

It tends to be that the more commoditised the risk and risk transfer process, the more likely it is to be standardised.

But, in reality, what has been seen in the last 20 years, is that even the most standardisable risk transfer products or categories have tended to end up becoming increasingly complicated by participants desire to demonstrate value and prove usefulness to the ceding company.