Maximising opportunity in the face of a turbulent market conditions

Maximising opportunity in the face of a turbulent market conditions

Lloyd’s recently advised that those involved in the insurance and reinsurance markets need to be ‘cognisant’ of challenging reinsurance market conditions and the impact on renewals. Within the overall context of the recently published Lloyd’s Principles, syndicates were also advised that there will be increased support for those able to capitalise on any opportunities offered up by these turbulent market conditions.

Patrick Tiernan, Chief of Markets at Lloyd’s, added that reinsurance market conditions are being closely monitored and that such material shifts require close attention. The potential impact is significant with approximately one quarter of gross written premiums in the market ceded to third party reinsurance capital. He urged increased diligence with respect to the availability, structuring, pricing and terms of upcoming reinsurance placements, particularly in property and certain specialty classes.

In conjunction with the Lloyd’s principles on outwards reinsurance there is an inherent expectation that syndicates consider the feasibility of their planned reinsurance strategy, with a reassessment of risk appetites, underwriting strategy and capital, if placements do differ to plan.

"The hurdle syndicates face in responding in such an agile fashion to changes in placement expectations is access to detailed (granular and aggregated) timely, accurate data."

The hurdle syndicates face in responding in such an agile fashion to changes in placement expectations is access to detailed (granular and aggregated) timely, accurate data. This is both to be able to anticipate and forecast those changes and then model and report on their response strategy. The annual syndicate forecast and submission process is particularly onerous with traditionally a significant proportion of manual effort required to ensure as high a degree of accuracy as possible. The need to be able to accurately forecast and then re-strategise is a costly and effort intense task.

Whilst syndicates need to be cognisant of current conditions there are opportunities, as reinsurance markets harden and Lloyd’s will be supportive of those able to grow. An example of this is for those who write inwards treaty reinsurance. It is to this and other opportunities that Lloyd’s will look to actively offer support. 

Interpreting this, it seems top-performing syndicates will enjoy a little more capital flexibility when it comes to growing in catastrophe risks, whilst those whose actual performance has fallen short of forecast are unlikely that same level of flexibility.

So how do syndicates best position themselves to be agile on the face of these turbulent challenges and opportunities ? 

From a data capture analysis and reporting perspective there is a fundamental truth. Outwards reinsurance data touches every part of your business. Agility requires a real-time, single version of the truth with traceable governance.

It is the ‘gross to net’ calculation process that positions outward data at the heart of analysis and reporting processes up and downstream. Agility comes from early visibility and automatic notification of any single or aggregated data component that implies a threatening trend, whether underwriting, finance, actuarial or placing management.

At Cenata we spend a lot of time during our requirements discovery phase reviewing the quality of the inwards data to be imported into Cenata SURE. Typically, this is a mix of system and spreadsheet data. We do this to understand who is dependent on which parts of the resulting data. For it to become an agility gain in your decision making you need to be made aware on a 24/7 basis via all mobile devices that you have potential exposure threats, automatically and immediately such that your response is effective, whether tactically or strategically. 

"Cenata SURE is designed to make available all the data involved in the gross to net process and through its Business Intelligence analysis tools, create the required 24/7 notifications and supporting data at a granular and aggregate level."

Cenata SURE is designed to make available all the data involved in the gross to net process and through its Business Intelligence analysis tools, create the required 24/7 notifications and supporting data at a granular and aggregate level.

If you need to go outside of your business for further supporting data, Cenata SURE has all the API integration capability to integrate externally with your internal data for even better proactive decision making. 

At Cenata we refer to agility as the ability to proactively analyse the right data for optimised decision making. Take advantage of the data at your fingertips to quickly re-strategise and exploit the opportunities ahead. Talk to us at Cenata on how to see through the turbulence to the opportunities.

 

 

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