Tremor Technologies, the insurtech offering a technology-based programmatic insurance and reinsurance risk transfer marketplace, has now exceed $1 billion of limit placed, after it completed a renewal placement of W. R. Berkley’s property catastrophe reinsurance tower.
Tremor has now helped its clients place a significant amount of risk with sources of reinsurance capital over the last few years across more than 15 auctions held, becoming the only programmatic marketplace technology provider to gain real traction and place syndicated deals with multiple markets on behalf of multiple cedents.
The latest placement for insurance carrier W. R. Berkley Corporation is the third time Tremor has placed some of its reinsurance program and this time it was the property catastrophe tower.
Then last year, Tremor brought $600 million of capacity to, priced and placed W. R. Berkley’s property catastrophe reinsurance program renewal, with over 50 reinsurance providers from all major markets bidding.
This year, W. R. Berkley optimised the pricing on its property catastrophe reinsurance tower renewal and also “learned exactly how much capacity was available at thousands of price points for their program,” Tremor said.
Tremor said today that it is “thriving” amidst the hardening and challenging reinsurance market environment, which it believes puts it on course for broadening momentum into 2021.
As execution becomes key for reinsurance cedents, how program towers are placed is going to come under increasing scrutiny and questions are likely to be asked over whether the traditional and still-standard way of placing and syndicating programs is really good enough any more.
With reinsurance rates firming and likely to stay firmer, given market’s increasing awareness of climate risks, social inflation, the costs of the pandemic and the ultra-low interest rate environment, cedents should be looking to how else they can add efficiency and reduce costs in their reinsurance placements.
Part of this has to be questioning the traditional way of doing this part of the business and whether manual placings can ever be as well-optimised as programmatic, plus what the cost-benefit is of embracing technology to help in the reinsurance placement process.
These issues have been bubbling under the surface of the reinsurance market for some years now, we’ve documented them regularly. But in 2021, with rates much firmer and threats hanging over the industry, while markets renew their focus on achieving sustainable profit levels over the longer-term, ceding companies would be well-advised to think long and hard about what efficiencies they can add to their reinsurance buying processes.
Tremor believes that its auction based technology has now been “field-tested in soft and hard market conditions, bringing efficiency, transparency, and speed to the reinsurance placement process.”
“In soft markets, Tremor’s technology gives cedants the ability to easily expand panels to enhance competition, and in hard markets Tremor quickly provides valuable price discovery when it is otherwise difficult to gather because market participants are holding their cards very close. Showing value for cedants across the gamut of market conditions is an important milestone for Tremor,” the company explained today.
Value is a key word for ceding companies to think about in 2021.
What value and efficiency are you getting from your relationships and the manual placement of your reinsurance tower. While market’s should be considering how their own capital and capacity can be most efficiently deployed.
At a time when carriers everywhere need to boost their profits and demonstrate the long-term sustainability of their business models to their own investors, if both sides of the trade embrace efficiency there will be benefits, of efficiency and financially, available for everyone.
Tremor CEO, Sean Bourgeois commented, “Tremor performs in every market cycle delivering robust reinsurance placements with competitive clearing prices in either soft or hard markets.
“By incorporating market feedback, Tremor’s flexible technology has evolved the offering since the company’s inception, which now allows for complex subjectivities and provides instant aggregate visibility to help cedants confidently answer one question: ‘How do I know what I paid was the right price?” Like efficient markets elsewhere, the answer is transparent: “Because that is where supply met demand.”
In the technology start-up world, the word “democratisation” is often used to explain how technology can free users by making advanced processing possible for everyone.
The same is true in reinsurance and Tremor believes that it has democratised the reinsurance placement process for cedents and reinsurers, making its advanced, programmatic marketplace technology available to anyone wanting to use it.
“Over the last 18 months, we have seen the number and the mix of reinsurers change significantly program to program for cedents open to panel flexibility. Leading reinsurers compete on equal terms with small reinsurers and syndicates who have won outsized shares on programs than they might have otherwise. Cedents access more capital, broader participation and faster, better and more competitive execution,” explained Bourgeois.
A democratic approach to matching risk and capital means making capital express its own efficiencies, which can result in far superior execution when it comes to building out towers and syndicating risk around a marketplace.
At the same time, the beauty of technology is that it can also allow the seller (or cedent) to express rich preferences, identifying the types of capital it wants to work with upfront, so providing perhaps even more control for the originator of the risk being placed.
There’s always been some reluctance to embrace anything that automates what has always been seen as such a key part of the placement and renewal process.
Brokers fear the loss of the piece of the transaction they’ve always talked up, but which is actually not at all the main value-add they bring to the overall lifecycle of renewals.
Some markets also fear technology, as they don’t feel capable of expressing the efficiency of their capital through markets and worry that it could exposed the fact their capital is not as efficient as you may have thought, or that those with a lower cost-of-capital will win out.
But, gradually the market (on all sides) is coming round to the idea that this type of technology is truly necessary for it to gain the efficiencies that the wide range of capital offered to it can now provide. As well as that, efficiency gained through the use of tech ultimately helps to make its own capacity more elastic, go further and more efficient as well.
At a time when gaining efficiencies is so important, it seems likely cedents, reinsurers and importantly broker will increasingly look to how technology can optimise reinsurance placements for them.
Leaving them to focus on the parts of the process that benefit most from human interaction and relationships. While leaving the complex math of matching risk and capital to technologies that are much more capable of solving for the best possible outcomes.