At a recent meeting of a group of insurance and reinsurance industry leaders in Bermuda, we discussed market conditions such as innovation, technology change and regulation.
Technology was identified as the most powerful tool to navigate through a storm of modern business challenges.
The continuing soft market, increasing competition from third-party capital such as insurance-linked securities (ILS) and the ongoing wave of mergers and acquisitions (M&A) were identified as obstacles besetting the current re/insurance industry.
M&A, which involves the complex integration of business cultures, staff and legacy IT systems was seen as a challenge – but also a golden opportunity for smart businesses to use the best available technology to smooth the transition toward a more efficient way of doing business.
Despite the various challenges facing the re/insurance industry, we found the mood of the executives was upbeat and even buoyant. The tailwinds facing the industry are undoubtedly complex and formidable, but the industry really grasps the fact that better IT and systems can be a lifesaver in this fiercely competitive market.
The roundtable heard that in a soft market with tight margins, the temptation was to shy away from big investments in technology. However, Kathleen Faries, head of Bermuda for Tokio Millennium Re, noted: “The ones (insurance and reinsurance companies) that will ultimately win are going to be the ones that are able to be nimble and evolve their operating platform. Change is coming, change is already here, so we have to try to adapt as quickly as we can.”
The roundtable members were appreciative of Bermuda’s regulatory environment, which contributed to the island’s flourishing re/insurance sector and acceptance of new forms of risk transfer to the capital markets, such as ILS. Bermuda’s full compliance with the EU’s Solvency II capital standards regime was also a major vote of confidence for the island, which is already beginning to bear new business.
Time after time, the re/insurance industry has risen to meet every challenge it has faced as a rapidly evolving business environment has given rise to even more complex risks. It is heartening to know that the Bermuda re/insurance market is eager to embrace the very latest IT tools to help it grasp the new opportunities of the digital world and to thrive.
To find out more about the roundtable, download the whitepaper here.
Richard Clark is is the Business Development Director for Xuber, now part of CSC. Richard has been a key player in Xuber’s insurance software business since 1997.