The reinsurance industry has identified technology as a vital tool in the quest for survival against challenges such as third-party capital, soft market conditions and impending regulation around the globe, according to a survey by Xuber.
The survey found that 53 percent of respondents are planning a major investment in IT in the next 18 months, while two-thirds agreed or strongly agreed that technology drives the success of their business.
Xuber cited the soft market and the pipeline of alternative capital such as insurance-linked securities (ILS) that provides buyers with other sources of risk-bearing capacity beyond what is traditionally supplied by reinsurance firms as being major concerns.
When asked how they respond to the statement “technology drives the success of my business”, 66 percent either agreed or strongly agreed, and only 13 percent disagreed.
One executive said: “Going forward, with pressure on expense ratios, this will be more true, and IT, systems, operational efficiency, analytics, pricing, reserving, accumulation technology and [enterprise risk management] will be more important.”
The survey concluded by asking executives to name any changes they would make to improve the reinsurance industry and the conclusions included investing in disruptive technology and techniques to speed disintermediation and governments moving risk out of government managed programmes into the private sector.
Chris Baker, executive director at Xuber, said: “It is encouraging that the industry has grasped the fact that IT will be a vital tool in the battle for success and survival, and that the majority of executives we engaged with are planning a major IT investment.”
“In its never-ending quest to leverage present day technologies, the reinsurance sector must not be afraid to consider ‘next-generation’ innovations.
Baker continued: “In underwriting, automation helps integrate pricing with exposure tools and can deliver consistent pre-bind application. Integrated workflows help co-ordinate better interaction with third parties and allow better management of retrocessions.”
“Firms that effectively harness technologies and the opportunities they offer are destined to be among the industry winners, leading the way toward growth and prosperity.”
