AkinovA, one of the insurtech start-ups targeting provision of a marketplace for digital trading of reinsurance risk, has selected Aquis Technologies to provide it with necessary matching engine and compliance related software.
Akinova has been promising delivery of a digital platform for transfer and trading insurance and reinsurance risks as it looked to launch with an industry-loss warranty (ILW) type of product.
Details remain scarce on the exact product offering that will emerge from AkinovA, but the start-up has managed to garner support from industry stalwarts including Hiscox and MS&AD.
In recent months AkinovA has adopted a focus on cyber risk as a trading line of business it seems, as it seeks to specialise rather than target the most commoditised areas of reinsurance.
But to deliver on its promises the technology stack is all important and rather than building its own AkinovA has elected to bring in a partner to supply some core pieces of its marketplace platform.
Enter Aquis, who will be providing matching engine and compliance related technology to AkinovA, which is a significant chunk of the underlying tech required to run any marketplace.
Jonathan Clelland, COO, Aquis Exchange, commented, “We are very pleased that AkinovA has picked Aquis Technologies to help it launch such an innovative marketplace. This signifies yet another milestone in the sophistication of the products and services Aquis offers the financial industry.
“The AkinovA team brings with it extensive experience from Insurance, Capital Markets and Technology that we believe is needed to launch a successful electronic marketplace for the (re)insurance industry. We are confident that with our expertise and innovations, we will make this partnership a lasting and influential one.”
AkinovA CEO Henri Winand added, “Having reviewed a number of options, we selected Aquis because of their cutting-edge technology, desire to innovate and their range of solutions and services. We look to work with partners who are prepared to learn and evolve with us and Aquis are without a doubt a forward-thinking company whose dynamism and proven success in building a market leading matching engine make them an obvious choice of partner.”
AkinovA’s original focus had been on more commoditised areas of risk such as catastrophe business, where a modified ILW product (which is what it had promised) may have found traction and therefore sufficient activity on a marketplace to drive some trading and liquidity.
It’s focus having recently moved towards cyber, a product that is far less commoditised and where underlyings are far less certain, is an area that can naturally lack in liquidity, under traditional risk transfer constructs.
Technology can help to drive liquidity of course, but only where standardisation and transparency are adopted more broadly as well, to enable more frequent and simple transfer of risk to occur. Adding any complexity at all will not help generate more risk transfer flow, we believe.
With its focus having shifted to a complex area of risk like cyber, it will be interesting to see ultimately what kind of product AkinovA brings to market and how it can address the need for marketplace trading activity to be seen and be available to participants.
Marketplace technology alone, even the most sophisticated, will not necessarily drive trading and liquidity, without the underlying product being one that is easily understood and well-suited to frequent transfer of the actual risks. In addiiton there needs to be sufficient demand to generate trading interest and ensure there are both buyers and sellers to participate.
Hence, start-ups need to focus their activities on adding value to the chain, as well as what can feasibly be delivered, ensuring promises made match the needs of the widest cross-section of the risk markets as possible.
The risk trading marketplace space is at a fascinating juncture currently, with numerous strategies emerging and different routes being taken by start-ups.
But start-ups are learing that in reinsurance and ILS there is a definite requirement to solve a problem for people, add efficiency, meet a real market need, or bring an entirely new product offering, if success is to be assured. The road is littered with many failed risk trading markets and there are likely to be many more.
It does seem likely that multiple winners in this space will be found though, after some experimentation and fals starts. The risk transfer, reinsurance and ILS space demands greater capital efficiency and one way it can be delivered is through more seamless trading of risks. Hence it will be interesting to see how each start-up develops and what value each can bring to the market.
Of course, the two things all electronic risk trading marketplaces offer are: enhanced opportunities to access risk for capital or capacity providers; and streamlined ways to transfer risk for ceding companies and hedgers.
Therefore the ILS market watches many of these initiatives very closely and at some point will dive in and adopt a number of these initiatives.
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