Tremor Technologies, the insurtech with a technology-based programmatic insurance and reinsurance risk transfer marketplace, has achieved a milestone in signing up all of the major reinsurance broking firms to use its platform.
The move means all of the world’s major reinsurance brokers can now offer to place their clients business using the electronic smart marketplace, benefiting from the efficient execution that could offer.
This is an important point in Tremor’s journey, as some brokers have been hesitant to turn over this last-mile of the reinsurance transaction to technology, the placement of risk with markets, based on their appetites for it, capital costs and efficiencies, and also ceding company preferences.
But this last-mile, the final placement and syndication or distribution of risk to multiple reinsurance capital providers, is where a significant benefit can be gleaned, both for the ceding company as well as the reinsurance markets and capital sources themselves.
By more efficiently distributing risk to capital, markets get to access the risk they want on their terms, letting their capital efficiency do the talking.
While the ceding company gets to set its preferences for the types of counterparties it wants, the structure it wants to achieve etc., while the complex marketplace technology can help solve for the optimal outcome and place the program in the most efficient way possible.
This is something a human broker could never achieve as quickly, or simply, as computational power can, making it an important milestone when all of the major brokers begin to adopt this kind of technology, in our view.
Solving for optimal outcomes for the client and the risk capital providers is what this is all about and by making it easy for all parties in the chain to use its platform, Tremor is having continued success it seems.
The insurtech company is also not trying to drive clients down a route that would see them becoming tied to its marketplace, or burdened with new standards.
It is not forcing them to adopt proprietary data standards for example, which we understand has also been well-received by a market that has consistently experienced technology providers or vendors attempting to force standardisation on them in areas where it does not add value to their business models.
Every ceding company, every reinsurance or capital market and every broker are different.
But they all want to use technology that fits with the way they run their businesses and that can bring immediate benefits to them, in terms of utility, efficiency and executing better. This approach seems to be helping Tremor gain traction, particularly in the broker space.
Tremor has now secured agreements with 8 major reinsurance brokers, that between them represent over 95% of reinsurance placements worldwide.
On the risk capital side, Tremor now has 110 reinsurance companies, ILS funds and Lloyd’s Syndicates active on its marketplace, accounting for a huge amount of capacity being available.
As a result, the company believes it has, “solidified its place at the center of the modernization of reinsurance risk transfer worldwide.”
Sean Bourgeois, Tremor CEO and Founder, explained, “We have said from the beginning that Tremor supercharges risk transfer with a new market model that benefits all parties. In a Tremor placement, reinsurance brokers focus on advisory, structuring and coordination of counterparties. Tremor supercharges pricing and allocation with faster, better and more competitive execution with modern trading technology. Pricing and allocation is much better managed with this technology – as is the case in every major capital market around the world.
“Does this change the broker’s current role? Sure. Does it disrupt reinsurance? Let’s be candid, it does. But for the better. Cedents get better execution, reinsurers see more risk more often with capital committed for far shorter periods of time exactly as they want it committed. Brokers get to focus on where they add value most and Tremor supercharges everything with a superior market model. Everyone wins.”
Tremor launched its next-generation risk trading platform, Tremor Panorama, earlier this year, enhancing the tools available to buyers and giving them a view of the market of competitive quotations before they bind risk capacity at their chosen price.
At the same time, Tremor Panorama allows reinsurance capital providers on the other side, including insurance-linked securities (ILS) players, to quote precisely how they want to, including any preferences they want to apply.
That new platform has helped to increase engagement on both sides of the trade for Tremor, growing demand for reinsurance capacity, but also the availability of capital to support it.
In our view it is encouraging to see Tremor highlighting that it does offer a disruption to the traditional ways of doing reinsurance business.
Too many insurtech’s try to fit in with the traditional ways of transacting, bending their products to try and appease the market, which ultimately reduces their usefulness and the benefits of efficiency they could have provided.
The reinsurance market is increasingly maturing in its use of technology and companies are aware they need to modernise the way they transact as well.
Plus, an increasing number in reinsurance are cognisant that the more efficient they can make their own capital and capacity the better for them, for their clients and also for their shareholders.
In fact, shareholders should really be asking ceding companies what they are doing to optimise their reinsurance purchasing, while reinsurers and ILS funds should perhaps be asked by their backers what they are doing to make their capacity more efficient.
There are a range of technologies available to achieve this, both for cedents and markets, with Tremor providing one that covers off one of the most critical pieces of the risk-to-capital chain, the optimised placement and matching of risk with capital.
At the same time, brokers shareholders should also be asking what they are doing, to ensure they offer the best transactional experiences to their clients, part of which is embracing the most appropriate technology solutions to help them enhance experience for clients, while making the end-result placement more effective and efficient.
Tremor said it now has commitments in place to triple its volume for 2021, which would be impressive growth, while it is also getting several inbound inquiries each month from across the industry – brokers, cedents and reinsurers.
“Panorama is the natural evolution of Tremor’s technology. But this isn’t where we stop, this is where we start. We are continuing to build major new features that do things the traditional market simply cannot – for buyers that want to compare pricing for various peril, structure and treaty combinations to show their CFO precisely how they are optimizing their purchasing in real time, Tremor is delivering,” Bourgeois said.
The increasing willingness of brokers to work with Tremor is seen as an important step and shows the market adoption of this kind of technology could be poised to explode.
Bourgeois added, “Brokers initially took to Tremor slowly, seeing our technology as a threat. But what we have found over time is that as cedents ask their brokers to deliver placements with Tremor, brokers quickly see the benefits we deliver to them and their clients in ways that simply cannot be replicated with the traditional process. We believe this has been a key factor to the rapid adoption of every major broker this year.”