London (June 23, 2015) – Xuber, Xchanging’s insurance software business which delivers solutions to the commercial insurance and reinsurance marketplace, has revealed the third and final chapter of the results of a global reinsurance survey(1) focussing on information technology.
Faced with a raft of challenges in the current market – such as third-party capital, soft market conditions and impending regulation around the globe – the reinsurance industry has recognised technology will be a vital tool in the quest for survival and success.
Highlights of the survey included:
- 53% are planning a major investment in IT in the next 18 months;
- Two-thirds agreed or strongly agreed that technology drives the success of their business;
- 52% of businesses believe they are currently compliant with upcoming regulation;
- 35% are planning to invest to ensure their firm will be compliant with regulation.
Technology a vital tool as reinsurers face perfect storm of challenges
The soft market, which has been eating into reinsurers’ rates while eroding terms and conditions, shows no sign of waning. Nor does the pipeline of alternative capital such as insurance-linked securities (ILS) that provides buyers with other sources of risk-bearing capacity beyond what is traditionally supplied by reinsurance firms. Regulation has also become a more pressing and expensive concern for reinsurers, along with the quickening pace of M&A that is transforming the market and the number of companies operating in it. Confronted with this barrage of challenges, it is not surprising that reinsurers are turning to technology to help them navigate these choppy waters.
Regulation driving IT investment
More than one third (35%) of respondents said their future IT investment was specifically to make them compliant with impending regulation. When asked how they respond to the statement “Technology drives the success of my business,” 66% either agreed or strongly agreed and only 13% disagreed. One executive said: “Going forward, with pressure on expense ratios, this will be more true, and IT, systems, operational efficiency, analytics, pricing, reserving, accumulation technology and ERM will be more important.”
The survey concluded by asking executives to name any changes they would make to improve the reinsurance industry and the conclusions included:
- Invest in disruptive technology and techniques to speed disintermediation;
- Have governments move risk out of government managed programmes into the private sector;
- Focus on the next generation of practitioners;
- Lose the complacency and enforce stricter underwriting discipline.
Chris Baker, Executive Director, Xuber said: “It is encouraging that the industry has grasped the fact that IT will be a vital tool in the battle for success and survival, and that the majority of executives we engaged with are planning a major IT investment. In its never-ending quest to leverage present day technologies, the reinsurance sector must not be afraid to consider “next-generation” innovations.
“In underwriting, automation helps integrate pricing with exposure tools and can deliver consistent pre-bind application. Integrated workflows help co-ordinate better interaction with third parties and allow better management of retrocessions. Firms that effectively harness technologies and the opportunities they offer are destined to be among the industry winners, leading the way toward growth and prosperity.”
Click here to download the full report.
1. Xuber surveyed executives working in the reinsurance sector in the UK, US, Bermuda, Canada, Channel Islands, Cayman Islands, Germany and Switzerland. The respondents included reinsurers, insurers, brokers, regulators, industry organisations, lawyers, ILS investment managers, analytics firms and modellers.
Xuber is an international software house that has been a trusted provider of innovative specialist commercial insurance software, end-to-end, for over 40 years. Xuber forms part of Xchanging plc, the business technology and services provider.
To learn more about Xuber, which serves over 180 customers, with more than 300 successful implementations across 46 countries, visit www.xuber.com.