Lead Forensics


Visualising Your Treaty Portfolio Of Billions Of Locations In Real-Time

01.11.18 Luke Norman

As we approach the end of 2018, for many, thoughts turn to Christmas shopping and New Year´s celebration plans, but for the insurance sector, this is one of the most crucial seasons of the year. Many reinsurance contracts will renew on the 31st December and at the time of publication, many insurers will have met or been meeting with their reinsurers to negotiate their renewals. The Monte Carlo Rendez-Vous in September is seen as the place where market players meet to get a sense of how pricing will be on the 1st January, while the Baden-Baden Congress in October is where more advanced discussions on pricing take place.

Despite the heavy cat losses over the recent years, the main rating agencies expect pricing to remain flat. Forecasts predict rate increases to hover in the low single digits across the reinsurance market. Goldman Sachs recently estimated that reinsurance pricing is “likely to come under further pressure at 1 January 2019 renewals due to below-average catastrophe losses over 3Q 2018 and a sustained influx of alternative capital.”

Against a backdrop of rate momentum deceleration and weak pricing during the mid-year reinsurance renewals, underwriting discipline comes under increased scrutiny. In this context, exposure management and catastrophe modelling teams are under pressure to give added value to underwriting teams. However, due to the laborious and overly manual processes involved in accessing and querying exposure data from multiple cedents, it can be time consuming to produce even basic analysis. This means that exposure management teams are finding that a significant majority of their time is spent entering, transforming and querying data, rather than doing the more in-depth analysis, which would provide underwriters with valuable competitive insight.

In addition to this, insurers and reinsurers are recognising that they need to derive more value from the data that they have within the organisation. Reinsurers, in particular, have access to terabytes of data representing all of their cedents´ portfolios, but so often they are held back in terms of the analysis that they can do by limitations of their technology capabilities. These limitations mean that analysts either need to sacrifice the volume of the data included in their analysis, or the granularity of that information.

For reinsurance portfolios, this often forces people to analyse against aggregated regions like state or even country level, meaning they cannot sufficiently assess exposure to perils with high variation within small regions, such as flood, hail and wildfire. With many insurers and reinsurers committing to becoming more data-driven in their underwriting process, limitations like these place serious boundaries on their abilities.

Many reinsurers also face serious challenges in identifying accumulations of risk across cedents. If they are using systems that are primarily designed for insurance rather than reinsurance, they may be able to assess an individual cedent at one time, but they are not able to easily carry out analysis across their whole portfolio. In this age, reinsurers should be able to analyse across their whole portfolio and immediately identify areas of accumulation, anywhere in the world. This allows them to put in place pro-active accumulation checks, and highlight at the point of underwriting whether a new quote would add to these accumulation zones or diversify the book.

Advances in technology and data analytics mean that reinsurers can assess risk better than ever before. Transforming business through an intelligent IT strategy is a game-changer. It´s not the silver bullet, but integrating innovative technology is a fundamental strategy in order to survive and thrive. Any reinsurer worth their salt should be taking a long and hard look at how to gain more value from their IT assets.

An InsurTech survey we held earlier this year suggests that reinsurance executives are doing this very thing. Upgrading technology was selected as the most pressing concern. But, the challenge remains, how to harness this plethora of new technology to make more informed underwriting decisions to select those risks which will better diversify their portfolio and avoid the large catastrophic losses? This will be key in surviving the prolonged soft market.

At AdvantageGo, we have just launched Exact Max, our powerful exposure management solution, which for the first time ever allows reinsurers to swiftly and accurately visualise their entire treaty portfolio of billions of locations in real-time and with high-resolution location data. Through Exact Max, reinsurers can gain competitive insights by assessing each cedent’s portfolio in unparalleled detail, including map visualisations, year-on-year changes, and peer benchmarking.

Utilising innovate technology such as this will give reinsurers greater confidence in the way that accumulations of global treaty portfolios are managed and will strengthen their resilience to navigate the stormy weather ahead.

Click here, for more information on Exact Max – Reinsurance Exposure Management Solution.

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