Reflecting a changing market

A modernised reinsurance industry requires a streamlined approach that isn’t hampered by manual processes. Howden Tiger’s George Harris Hughes and Michelle To explain how the firm’s in-house REflect solution is transforming how long-tail reinsurance is procured in the casualty market.

Advanced digital solutions can help brokers find a competitive edge and allow cedants to identify opportunities – and challenges – ahead of schedule. The benefits are clear, with companies able to extract tangible value through deeper engagement with their data.

Many firms are still impeded by manual processes that are time- and resource-intensive. These archaic processes can make buying reinsurance a woefully inefficient exercise. The motivations, data and structures involved in long-tail reinsurance purchases have become more and more sophisticated. We don’t believe the placement process has evolved to keep pace; more time should be spent discussing the qualitative elements of a portfolio and less time establishing the quantitative, which is why we decided to innovate.

A game changer

Frustrated with the status quo, we decided to create REflect, our in-house reinsuretech platform that provides greater speed, accuracy and insight during the placement process. REflect uses modern data science to automate the quantitative processing involved in a typical renewal, giving us back more time to better meet our clients’ objectives. This solution has been developed to address inefficiencies that specifically affect the casualty reinsurance market, and we expect to roll it out across other classes in the future.

It’s worth looking at how long this all normally takes to get an idea of the impact of REflect. Ideally, our clients cut their data four to six months before a renewal, and then spend another month or so working with us to refine it. We then run our analysis. For a 1 January renewal, you might start in the summer and aim to be in the market by the autumn, a lead time of 12-16 weeks in all. There is a reliance on manual (human) cleansing processes throughout, and it is not uncommon to unearth data issues at a late stage, which can mean starting the whole process again. In reality, data is often cut much closer to renewal, compressing the timeline into a matter of weeks. The current lack of time, data accuracy and simplicity creates a huge amount of deal friction.

Instead, REflect cleanses, validates and enriches client data to provide a simpler and more useful proposition – taking weeks instead of months and giving back valuable time for analysis. The system collates technical results into an easy-to-access, consistent format, giving cedants a clear view of their portfolio as it evolves and allowing them to alter structures and understand impacts in real time. Cedants can interrogate their reinsurance on a granular level (justifying each unit of reinsurance spend), aiding portfolio optimisation and driving more informed purchasing decisions.

Innovation through agility

Reinsurance is an area already targeted by insurtech start-ups. However, we have the scale, distribution and agility to give this kind of solution the heft it needs to make an impact. Unlike other reinsurance brokers, we aren’t afraid of change and have invested time and resources into allowing innovation to thrive.

We are developing REflect with our proprietary market insights data platform NOVA. Since 2021, NOVA has provided clients with access to unique global market insight and strategic consultancy, combining unique datasets from over 300 sources including placement data and wider market financials.

Now we are building on this progress with REflect. Fundamentally, it’s about showing cedants where every unit of their reinsurance spend goes. This streamlined process means more time to do real analysis, with clients benefiting from the transparency needed to take an objective view of how risk is priced.

The technology is also reflective of the shifting role of brokers and growing focus on advisory services. The portfolio optimisation and market insight elements of REflect will form a core pillar of our capabilities as we evolve into advocates.

One of the most exciting parts of this is the potential to further innovate and enhance this system. What role will AI have, for instance? And how could migration to a fully cloud-based architecture supercharge client insights? This all awaits us, but based on the REflect journey so far, we can’t wait to see what the future holds.

George Harris Hughes is managing director at Howden Tiger

Michelle To is head of business intelligence at Howden Tiger