Nasdaq looks to reinsurance as potential client vertical

Nasdaq inc. created the world’s first electronic share trading platform and stock exchange and is now among the largest providers of trading, clearing and exchange technology, so it’s intriguing to learn that the organisation is looking into new markets and that trading of reinsurance is one potential avenue of expansion.

Nasdaq already powers a significant volume of the world’s electronic financial markets and transactions, so it stands to reason the company would be on the look-out for opportunities in non-traditional markets and new asset classes.

The firm’s trading technology already matches millions of buyers and sellers each day on the financial markets and with risk and reinsurance a hot topic in insurance technology (insurtech) circles, it’s no surprise that Nasdaq has one eye on the market.

Nasdaq wants to expand beyond just the typical financial markets where its trading technology currently operates, with areas like advertising and reinsurance cited as possible areas that its existing tech could make a difference.

A Nasdaq spokesperson confirmed that the reinsurance market is one vertical where it sees an opportunity to deepen its customer focus. This could position Nasdaq to be able to provide more services to reinsurers and others interesting in the market, which could in the future include the ability to trade in risk.

Nasdaq’s exchange technology could be utilised to match protection buyers and sellers, offering the reinsurance and insurance-linked securities (ILS) market a way to buy and sell product.

Artemis spoke with Greg Wojciechowski, the President & CEO of The Bermuda Stock Exchange (BSX), on the potential for trading technologies to make the trading of reinsurance and ILS risks more seamless and transparent. The BSX is already powered by Nasdaq technology and is the home to the vast majority of the world’s exchange listed catastrophe bonds and ILS transactions.

“The use of advanced technologies, such as Nasdaq’s financial framework platform, establishes a mechanism upon which innovative products can be brought to market in a responsive and efficient manner,” Wojciechowski explained.

He continued, “Bermuda and the BSX are a perfect example of a market that has used Nasdaq technology effectively to not only modernize its domestic capital market but to position itself to support the global reinsurance industry, and in particular the Insurance Linked Securities (ILS) asset class, which continues to steadily grow and evolve. Today, the BSX is a global leader in the listing of these innovative, market-driven securities.

“Collaboration with technology leaders such as Nasdaq can only lead to the advancement of future transformative trading options, and we’re excited to see Nasdaq’s technology looking to be applied to new markets such as the reinsurance sector.”

It makes sense for Nasdaq to look outside of the more typical markets where financial trading technology dominates. Other asset classes and markets that are often traded in a much more manual fashion may be ripe for digitalisation and reinsurance or ILS could be a particularly interesting one to see embraced by such a large financial technology giant.

Of course, Nasdaq is far from the only company looking at reinsurance and ILS as a sector ripe for technological disruption.

Numerous insurtech start-ups and established fintech players see the potential for friction and cost to be taken out of the risk transfer and reinsurance transaction process, making the sector a particularly attractive one for any disruptors.

Join us in New York in February 2018 for our next ILS conference