As reinsurance market modernisation and digitalisation continues apace, there are still a lot more gains to be made and as a result the industry can expect to unlock greater value and insight across the entire market chain, according to speakers in our recent live webcast.
Last week, we hosted a live webcast alongside our sister publication Reinsurance News, on the use of technology within the reinsurance market and the importance of cultivating data.
The insightful discussion, which can be viewed online here, was held in association with Genpact.
The discussion ranged around the reinsurance industry’s current use of technology and its ability to embrace new processes, with a view to what this might mean for the future of the reinsurance market as it looks to add more efficiency and innovate.
Sameer Dewan, Global Business and Digital Transformation Leader for Insurance at Genpact, discussed the gains that could be made with effective use of technology by reinsurers, which also applies to insurance-linked securities (ILS) operations and collateralised underwriters.
“I think there will be a huge, huge competitive advantage in every form,” Sameer explained. “Improved risk assessment, better underwriting, better pricing, both the sellers and the buyers can be more effective in that manner.”
He also noted a shift in how reinsurance markets engage with clients, by “Becoming more proactive, monitoring and preventing risks and going a step forwards,” which Sameer said “Is a net-positive for everyone in the industry.”
Moving to discuss the market chain and how effective use of technology can bring more than marginal gains for reinsurance market participants, Sameer said it’s prudent to reduce what he sees as data leakage.
“A lot is lost, because of data not being aligned and reconciliation taking an immense amount of time, there’s just a lot of leakage in the whole process,” he commented.
Alongside that, improving the way risks are transferred and transacted, leading to more efficient market structure, can also deliver gains to the industry.
“Better management of capital and matching it with risk. This is fundamental to almost everything that the industry can gain and be net-positive,” Sameer said.
Adding that this is a significant shift, “Obviously it’s a huge change, with a huge build-up and it needs to be done at a certain pace to keep up with what is changing in the environment and industry.”
But the benefits could be particularly significant and our webcast speakers concurred that there is significant benefits to smoothing the way reinsurance counterparties interact and trade, through the use of technology.
“I think there are many, many benefits in doing this across the board, in terms of selecting risk and managing the risk, in terms of being sure you are able to match up capital with risk well, so across the entire value chain,” Sameer enthused.
Vasco Nunes, Lead, Data Platform and Operations at Swiss Re, also participated in the webcast and said that the opportunity for transforming the insurance and reinsurance business model has perhaps never been greater.
“I actually sense that now is one of the best opportunities for the industry to transform, if not the best and, clearly the industry is moving at pace and fast. If you just look at the past few years, we actually see significant developments,” Vasco said.
But he also noted that it’s important to lay the groundworks to be able to leverage data and technology effectively.
Saying, “We see the increasing adoption of artificial intelligence and machine learning, although, quite frankly, I think access to data in the necessary quantity and quality remains a challenge for many.”
Positively he said, “A lot is happening, but I agree, that somehow it’s still a bit of a mixed bag. But I think this is very, very clearly all driving in the same transformative direction.”
Nigel Walsh, Managing Director, Insurance at Google, also participated and explained that culture is often as important as having access to the latest technologies, as implementation and adoption across the enterprise remains key.
“I don’t think technology on its own is the answer. Of course, it’s a core enabler, but actually, if you go back to the core tenets of people, process, and technology all put together, it’s a very simple framework to look at it. We have the right individuals, with the right technology to make it work first and foremost,” Nigel said.
Finally, Sean Bourgeois, Founder & CEO, of Tremor Technologies, Inc., was also a panellist and discussed the fact reinsurance is still lagging behind other financial markets, but positive steps are being taken and the opportunity to make efficiency gains is huge.
“Technology has fundamentally changed most capital markets,” Sean said. Adding that, “I think there’s a bit of a myth in the reinsurance industry, that it’s unique and very personal and as such technology cannot make the market more efficient.
“The same was said of most capital markets, most recently corporate bonds. All of which have made their pricing much more cost-efficient with the technologies that have been introduced there.
“So, I think as such, it’s very early innings in the reinsurance industry, technically speaking, with a trillion dollars plus of risk transferring every year really inefficiently. Most in the market will recognise, it’s a matter of time before the industry really begins to adopt modern trading technologies.”