Supporting innovation in the reinsurance broking market

Supporting innovation in the reinsurance broking market | Insurance Business Australia

Reinsurance

Supporting innovation in the reinsurance broking market

Avoiding solutions that look great but make no practical sense

Reinsurance

By
Mia Wallace

Over two decades of serving the market have gifted the Bermuda-based reinsurance stalwart Sal Tucci (pictured) with a healthy respect for the ‘organised chaos’ that is how reinsurance brokers operate.

With credits to his name including time at Aon Re Services and Aspen, and having launched his own reinsurance brokerage Reinsurex in the early 2000s, the throughline of Tucci’s career to date has been his recognition that the key to creating innovative solutions in reinsurance is understanding the mind of the market. It was on this foundation he launched Jireh Holdings Ltd with the ambition of supporting clients with ILS risk transformation, fronting and advisory services.

Backing innovation in reinsurance broking

Almost a year to the day of its launch, the firm’s reinsurance broker platform Jireh Connect announced its first industry loss warranty (ILW) placement and, in conversation with Re-Insurance Business, Tucci noted that the positive reaction to the business reflects the appetite for innovation at the heart of the market. What Jireh is looking to do is help reinsurance businesses think about how they innovate more around their current resources, he said, whether that’s people, products or technology.

“I started Jireh last year with a view to helping these companies innovate because what I’ve found is that many reinsurance companies do a really good job at their core underwriting, quoting, claims handling and their core reserving – which is what they should be doing,” he said. “But everyone’s calendars are so filled with meetings that one quarter tends to bleed into the next and it seems you never have the opportunity to step back and just think. And the projects that do get kicked off tend to go nowhere because no-one can focus on them.”

What reinsurance companies need is to partner with strategic innovators who can help them understand what it will take to make an instrumental difference within their organisation – whether that’s process, product or technology innovation. Most people tend to jump straight from A-to-Z when it comes to technology innovation, with GenAI offering a prime example, he said, which can be interesting and exciting, but all too often is not practical.

“It’s like owning a Ferrari and living in Bermuda where the roads are too narrow to go faster than 40km per hour,” he said. “It looks great but it makes no practical sense. Our sector has got so many other areas we could focus on from a technology standpoint that, by comparison, look mundane and boring. For instance, we’ve got way too many people doing way too many tasks and processes that could be automated.

“Implementing common sense, basic technology that helps you deliver better products and services to your customers or your capital market investors in a much more transparent way is a much better use of your time and resources than investing in the bright red ‘Ferrari’ of a high-cost transformation project.”

Creating solutions for the problems the market actually faces

Jireh Connect was built out of a small reinsurance broker’s demand for a tech solution to the challenges they faced when trying to effectively distribute and manage their opportunities in the marketplace. It’s a SaaS-based solution, Tucci said, which empowers brokers to manage, distribute their deals and then manage and track the resulting feedback, so it can be reported on later. This not only generates significant market intelligence but also allows this data to be moved in a structured way to the broker’s downstream systems – be those claims, finances or documentation systems.

“Because, all too often, many brokerage companies on the reinsurance side go out to the market but when the market responds, they’re storing those responses here and there,” he said. “And when a deal is done it can take three, four, even five weeks to document that deal. Whereas if you actually capture it in a structured way where the deal details are upfront, everybody can be on the same page and it prevents double-keying.”

It’s critical to solve that data input challenge, he said, because if you don’t capture the data correctly early in the insurance process then by the time it gets to the reinsurers’ level, it’s simply not as effective as it could be. As to why the market has tried and failed to effectively solve this problem for the last 20 years, he noted that there are two core factors at play – either developers are creating solutions that are ‘trendy’ rather than what the market needs and wants or they’re coming at the solution from the wrong perspective.

“They’re looking at this curious, idiosyncratic market that we love to death – which is insurance and reinsurance – through more of a Wall Street or Silicon Valley lens,” he said. “They can’t get their head around the idea that somebody buying an insurance policy goes to a broker who goes to an insurer, and sometimes a retail broker goes to a wholesale broker who then goes to the wholesale market.

“And there’s a reinsurance broker who an insurance company buys reinsurance from and there’s a retro broker… So, by the time you spend $1 on insurance premium, the guy at the end gets 30 cents. The people looking in think it’s dysfunctional and I think we could all agree our market is very unique! But it’s been operating like this for 100 years and it’s been operating well, so it’s dysfunctionally functional.”

Understanding the power of relationships in reinsurance

Coming from the outside means developers don’t appreciate the nuance of how the market operates, he said, or the powerful emphasis placed on relationships. They think it’s as simple as matching risk with capital so when they build solutions, they do so without a genuine understanding of what the market wants. Twenty-five (25) years spent running and working with re/insurance brokerages has given Tucci a clear overview of what the market wants – which is to do what it’s doing better, faster and in a more streamlined way.

Taking a descriptive rather than prescriptive approach to digitizing insurance and reinsurance processes has been the key, he said, because different clients move at different speeds, and have different expectations about how they can make their data work for them. Innovating the re/insurance market isn’t about taking a “one size fits all” approach to putting technology to work or about reinventing the wheel.

Rather, he said, it’s about meeting brokers where they want to be met and helping them solve the challenges that are impeding the bread and butter of their businesses – by helping to coordinate their reinsurance placements, distribute deals, securely share documents with markets and capture external market feedback. The early feedback has been very strong, with the platform managing nearly $100 million of capacity in its first month, and Tucci said he’s looking forward to seeing where the platform goes next as more markets start to actively engage on the platform.

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