With Covid-19 causing major disruption to the (re)insurance industry, Igor Best-Devereux – the founder and CEO of electronic placing platform eReinsure – tells The ReInsurer how the pandemic has brought the cost of distribution to the fore…
When The ReInsurer interviewed you last year at the RVS you spoke about the role of technology in reducing the total cost of distribution. A lot has changed since then. With so much emphasis now on remote working is cost still the primary focus?
The current pandemic is a major disruption, but cost is still the long-term challenge for the market. Total cost of distribution is a useful way of looking at this.
By which I mean that every activity involved in moving risk to capital must be scrutinized for relevance and value to the transacting parties. Everything is on the table. To drive cost reduction, the market is going through major transitions including how capital is structured and how service providers are compensated
The evidence for this includes intermediaries evolving and differentiating their value proposition. Insurtechs are a catalyst, bringing new skills and services to the market.
Give us some examples of the potential efficiency and cost savings in distribution. Where are we going to see these potential long-term gains in productivity?
I’ll divide some examples into two categories: the first enabled by technology and the second driven by it.
In the first category, there has obviously been a long-term effort to achieve economies of scale in (re)insurance – the large market players looking for potential benefits in the cost of origination and service delivery. Size and volume have brought opportunities to leverage technology and increase productization.
The second category includes features of what has been called the Fourth Industrial Revolution – including shared digital experiences and digital communities. Automation of “manufacturing” and processes, and the use of smart technology. Platforms such as eReinsure network market participants, providing opportunities for connected processes, interactive engagement and virtual communities. The digital nature of these networks supports data transfer and data quality that has been a historical challenge for the (re)insurance market.
What can you tell us about eReinsure’s strategy for growth in the current environment?
Online placing is surging at present due to market professionals working from home. It is ironic that it has taken a pandemic to increase adoption of online trading and overcome doubts about technology in a person to person business. Humans are very adaptable, and it is likely these changes in attitude will last.
Recently, we have placed additional emphasis on the user experience, and implementing features supporting working from home, including text notification and embedded chat. Equally important has been training and support as the user base has increased.
In parallel with eReinsure building a network of reinsurance buyers, brokers and sellers over the past 20 years, the premier reinsurers have been developing proprietary e-platforms for automation of quoting and binding. The platform offerings are now converging. Carriers that use eReinsure as a single outwards reinsurance platform can access automatically rated products from multiple reinsurers – all through a common interface. We are very excited about the benefits of these platform to platform connections.
Data is at the heart of all we do. A long- term development effort has been to assist the visualization of data for our customers. We are developing tools to help our users navigate the marketplace and achieve a more effective facultative spend.
We have always promoted the approach of a structured process to increase data capture and quality, which in turn allows for effective management of the reinsurance asset. Machine learning offers a new technology with significant potential for our customers to get greater value from their use of our platform. You can expect to see more from these initiatives in the future.