Swiss Re Insurance-Linked Fund Management

Original Risk: A Society for Change Agents

Digitization a first step towards ILS fund manager collaboration: Synpulse


Joel Smith, Associate Partner at Synpulse, a global management consulting firm, has argued that digitizing processes and information exchange represents an important first step towards improved collaboration for insurance-linked securities (ILS) fund managers.

joel-smith-synpulseWriting in Artemis’s Q4 2021 catastrophe bond market report, Smith noted that collaboration is integral to an ILS fund manager’s ability to run its business.

But today, these engagements among internal and external parties come at significant transaction costs, and the tools deployed by specialists are often not well integrated into end-to-end processes.

For instance, outputs from these processes frequently need to be combined with information from other specialists to enable decision-making on underlying investments.

“This blending of information is cumbersome to piece together and often involves duplicate data entry,” Smith explained in the Artemis report.

“Furthermore, such decision-making is taken up as a collaborative activity across cross-functional teams,” he added. “Today, this is a manual process whereby interpreting and reconciling information inputs eats into time that would be better spent discussing the merits and implications of a particular deal.”

Ideally, ILS fund manager collaboration would offer numerous benefits to various players in the industry, such as one user access point to all relevant information for decision-making purposes.

Other benefits would include fostering teamwork by combining multiple modes of communications from internal and external parties into one channel, and increasing productivity and transparency on business processes automation and ongoing activities.

But Smith acknowledges that any potential solutions to the ILS fund manager collaboration challenge still have significant hurdles to overcome.

A solution would need to account for the large variety of company-specific circumstances and processes already in place, such as different operating models and different arrangements of internal functions.

Looking only at dedicated ILS fund managers, Smith notes that some utilise dedicated portfolio management and underwriting teams, some a combined role, and some a hierarchical structure with senior decision-makers and supporting operations.

Clearly then, any solution to the collaboration challenge will need to be flexible to accommodate the specific operational setup of ILS fund managers.

But Smith maintains that beginning to digitize processes and information exchange still represents a crucial step towards developing “a common language, a definition of business terms, and a clear understanding of processes across the industry.”

He added that digitizing the process and information exchanges must also take the role of third-party partners into account, due to their involvement in key processes such as structuring, fronting, transformer capabilities, fund management and reserving.

“Deploying such a platform, results in an improved collaborative experience, data quality, turnaround time, and an overall more efficient and effective work environment,” Smith concluded.

The comments from Smith of Synpulse can be viewed in full here, alongside the complete findings of the Artemis Q4 2021 ILS report.

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