The growing complexity of reinsurance markets in recent years has increased demands on reinsurance buyers and radically transformed the industry, says Towers Watson.
Changes such as complex market data, Solvency II implementation, the dual challenges of accessing risk and distributing risk taking are generating the need for reinsurance buyers to achieve a holistic view of capital adequacy in order to invest for future profit and growth, according to Towers Watson.
“New market opportunities are emerging in spite of exceptional regulatory and political intervention and the market is undergoing more consolidation,” said Ross Howard, chief operating officer, Europe of Towers Watson’s reinsurance brokerage business. “A wide range of pressures has created a landscape that looks very different from that of only a few years ago.”
In this post-consolidated world, Howard says that reinsurance buyers can derive huge benefits by working with brokers who are more prepared than ever to deliver a more integrated and complete service offering.
For these reasons, Towers Watson predicts growing trends in the market to include:
- Holistic risk perspective: A fundamental change in the nature of reinsurance purchasing, planning, evaluation and marketing driven by Solvency II, is prompting insurers to consider a wide spectrum of holistic risks that go beyond traditional underwriting risk.
- Buying process under scrutiny: More rigorous testing and validation of the reinsurance buying process are determining its benefits compared with prior forms of solvency provision.
- Technology gap narrowing: Barriers to technology are falling as cutting edge software is forged by innovative broking houses outside of the “big three.”
- Brokers as risk advisors: Major international brokers will increasingly focus on improving their use of complex market data regarding placement of risk to provide specialized expertise to find the best price and terms in the market.
In a world of increasingly unpredictable risks and challenging regulatory requirements, Towers Watson says that brokers now find themselves well placed to provide a sophisticated and reliable market overview of reinsurance purchasing, as well as to act as risk adviser and obtain better terms.
“Powerful trends have created a unique opportunity where successful brokers will be defined by their ability and commitment to exploit both scale and specialist markets,” said Howard.
Source: Towers Watson, www.towerswatson.com
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