Reinsurance primed for e-trading
Nothing in the way of reinsurers taking up e-trading, Whitespace exec says.
By Mark Richardson, London Editor
It was only just over one year ago that the first risk was transacted on Whitespace’s e-trading platform. Since that risk, a marine hull policy placed by Price Forbes on 20 August 2019, the platform has enjoyed considerable growth, and a year on from that date had 109 customers with monthly placements in the thousands on the platform.
While Chief Platform Officer Marcus Broome says the majority of policies currently being transacted through Whitespace are primary policies, as the industry approaches the busy 1.1 renewals date, he is expecting greater use of the platform for reinsurance transactions.
“When we started everyone said the reinsurance market will be very difficult for you and it’s much more complicated and has been a big problem with electronic platforms,” he says. “We didn’t deliberately not start with reinsurance, but our business naturally just started in other places.”
However, as reinsurance customers have trialled e-trading through the Whitespace ‘sandbox’, Broome says the company haven’t found an obstacle that hadn’t previously been encountered in primary insurance e-trading.
Lockton Re recently announced it will be executing all its deals through Whitespace, and Broome says this will give the platform a real boost for take-up among reinsurers and other reinsurance brokers. He is expecting more specialist reinsurance brokers to make similar announcements, but it is through companies that have both an insurance and reinsurance unit where he thinks there is the most opportunity for growth.
“There are reinsurance specialists out there, but there are many more that write both a direct book and a reinsurance book,” he says. “It’s been more the case that firms have looked at the platform and the brokers they are working with, they compare their book of business with the brokers that are on the platform, and they say this makes sense to work with them.
“We are seeing the beginning of that same process now as we’ve opened up the reinsurance market. The reinsurance and direct markets are so well connected that we hope that starts to grow into other classes and we might start to move from the direct to the reinsurance sides of these businesses as well.”
With the cancellation of various conferences and events in the social calendar, along with a global shift towards home-working, there has been a significant uptick in e-trading this year.
Annual conferences at Monte Carlo and Baden-Baden are usually key to negotiations around 1.1 reinsurance renewals; however, Broome does not think their cancellation this year will mean the end of face-to-face negotiating entirely.
“When it comes to face-to-face or e-trading, one doesn’t exclude the other,” Broome says.
“There has definitely been a realisation that actually the wheels haven’t all fallen off due to lockdown, and that the application of modern technology to this market can in places improve the way that this business continues.”
However, Broome says the balance must be struck so that the industry can take greater advantage of the efficiencies available through e-trading, without turning the process ‘cold’.
“A video call isn’t quite the same as meeting up – you can’t quite sense the confidence of the other person – so I think events like Monte Carlo will absolutely come back,” he adds. “They may be different in future, and peoples’ expectation as to what you need face-to-face for may change.
“Everyone is learning as we go and thinking about possible changes in the cost structure, and I think in the face of adversity around the COVID-19 crisis everyone has an opportunity to come out of this stronger and find a more cost effective way of doing things.”
Broome thinks firms will look more closely at how they use human interaction in negotiations, and how it can be deployed most effectively.
“It may be that human interaction becomes an even higher value commodity going forwards because we can do less of it,” he adds. “People will be thinking harder about that and how it works. There is a big learning process going on at the moment.”
