Insurtech, Insurance Technology in reinsurance and insurance-linked securities (ILS)

Blockchain is a potential game-changer for the insurance and reinsurance sector, according to Fitch Ratings, who forecast that the technology will become increasingly embedded in the fabric of the re/insurance market over the coming years and that ILS related use-cases will continue to emerge as well.

Insurance and reinsurance sector CEO’s are currently in “surprisingly optimistic” mood about the prospects for their own organisations growth over the coming years, but are increasingly open to joint-ventures or strategic alliances to help them grow and at the same time still terrified of the pace of technological change.

Global law firm Sidley Austin LLP (Sidley) is anticipating the continued expansion of insurance-linked securities (ILS) and alternative reinsurance mechanisms in the months ahead, as traditional players increasingly utilise the capital markets to their benefit.

Reinsurance firm Swiss Re said this morning that it anticipates that reinsurance premiums will grow at a rate of 5% per-annum over the next five years at least, providing it with plenty of opportunity to put its strategy to work, but despite that opportunity a deal with a major investor remains under discussion.

It’s M&A season in insurance and reinsurance with seemingly nobody being safe from the searching eyes of an investor or acquirer and things are moving apace, with a number of deals on the table and likely more discussions going on behind closed doors.

Insurance and reinsurance companies face a conundrum. Driven by their need to modernise, innovate, digitalise and generally shift towards technology driven risk transfer business models, re/insurers are spending increasing amounts of money, causing their expenses and costs to rise as a result.

Executives from Lloyd’s of London said today that they welcome and want to work with the UK Government’s new insurance-linked securities (ILS) regulatory and tax framework, but at the same time warn that the UK ILS regulation is actually likely to increase the price pressures that its market participants face.

If you thought that the Lloyd’s of London insurance and reinsurance market had changed in the last decade, it’s likely nothing compared to the change we will see over the coming years, as the world’s oldest re/insurance market accepts the fact its model has become unsustainable.

Insurance-linked securities (ILS), reinsurance and transportation investment manager, Hudson Structured Capital Management Ltd. has entered into a strategic relationship with reinsurer Everest Re that will see it invest across several Hudson funds as the pair co-operate on a number of fronts.

A number of weather risk transfer transactions have been originated and executed thanks to Speedwell Weather’s parametric weather risk transfer platform weatherXchange, while requests for pricing of contracts are rising, according to the company.