Lay your cards on the table to win tech benefits

Among the many traditions in the insurance sector is a tendency to play one’s cards very close to the chest.

It’s a practice which originated with marine underwriters, who by revealing the details of their insurance risks would give away sensitive client secrets about markets and voyages. Centuries later, that old reserve is no longer beneficial, especially in reinsurance relationships.

Data is the essential ingredient to accurately pricing risk, but it’s only useful when shared. Similarly, a broker cannot deliver the best solutions when we don’t know exactly what our clients hope to achieve. Alongside clients who share these beliefs, we’ve proved repeatedly that transparency leads to better, more profitable insurance relationships. With the analytics and connectivity available today through brokers enabled with leading technology, it pays to put all your cards on the table.

Over the many years I’ve placed reinsurance, I’ve seen how the need for transparency goes beyond simple disclosure of data. For example, when clients share their capital model, we understand how they consider each aspect of every risk, and how it should all fit together. That allows us to build better systems to deliver optimal solutions. Unfettered, universal access to complete information is a principle the investment markets have relied upon for decades to ensure the efficiency that can lead to profitability through increased competition. It’s time we did too.

Reinsurance is incredibly functional, but it has always been a bit of a blunt instrument. In years past it was not possible to fit the product exactly to the wants or needs of the cedant (even when they were disclosed). As a market, we simply did not possess the ability to fine-tune the structure of the contract to match all expectations.

The combination of technology and transparency changes that. It makes reinsurance more useful by allowing the broker to develop a reinsurance program which fits more precisely with what each chief executive wants. Every contract and program placed, whether into the insurance or capital markets, is therefore much more likely to deliver satisfaction when utilised. Further, if a reinsurance product is aligned with the way an insurer records and reports each risk, it will inevitably be a better product.

To get these results, the tech-enabled broker must work with the client to resolve more and better data from all sources. We then dig deeper, and look together at more angles, which requires utter transparency. Last year, to support our clients in this area, Acrisure acquired the insurance practice of Tulco, a best-in-class data science company specialised in machine learning.

Tulco’s unmatched technology, fuelled with high-quality, high-volume data and transparency over risks and strategies, reveals unparalleled insights. They can be used not only to extract the greatest value possible from perfectly aligned reinsurance programs, but also, for example, to delve into emerging risk trends to allow rapid product innovation and development in response to real-world changes.

Clients that opt to open up almost inevitably achieve deals which are not just more accurately priced, but also better suited to their needs. We strive to maintain the sharing continuously (rather than in 12-month blocks), to feed the insatiable appetite of the market-leading systems we deploy. As a thoroughly tech-enabled broker, fully informed, we achieve for clients more of the coverage they really need, and deliver markets more of the risk they want, but it’s possible only when everyone lays all their cards on the table.

You can also view this article in the first weekly edition of #ReinsuranceMonth, which was published on 1 September by The Insurer and is available to download for free at theinsurer.com/reinsurance-month/weekly-editions.