Ongoing soft market conditions are the most widely-cited challenge facing the global reinsurance industry in 2015, according to a global study of reinsurance professionals by insurance software company Xuber. For its Global Reinsurance Survey, the company spoke with senior professionals including insurers, reinsurers, brokers, industry organizations, lawyers, insurance-linked securities (ILS) investment managers, analytics firms and modelers, across the U.K., U.S., Bermuda, Canada, Channel Islands, Cayman Islands, Germany and Switzerland about the top concerns and biggest opportunities facing the reinsurance industry today. Of those polled, 81% listed soft market conditions among their top five concerns, followed by competition from third party capital (66%), and mergers and acquisitions (M&A) (66%).
The top five challenges cited were:
Experts within the field do see plenty of growth opportunities as well. Indeed, some of this potential is thanks to the soft market. According to the report, “Another opportunity in the soft market identified by 59% of executives was to create niche opportunities that showcase their expertise. In a squeezed market, opportunities can open up for enterprising businesses that can identify today’s emerging risks and those of tomorrow and create products that are tailored for them. This can be linked to using Big Data better (51%) and diversifying the business portfolio (42%).”
The top five business opportunities cited were:
“This survey unearthed a range of new business opportunities that can provide the competitive edge needed to survive and prosper in the current environment,” said Chris Baker, executive director at Xuber. “With margins tight and prices falling, reinsurers are under great pressure to ensure their processes are as efficient as possible. Surviving and prospering in the soft market will require companies to operate at optimal efficiency, and their IT systems will be central to this. Only the savviest of reinsurers who recognize that technology can be the catalyst for change will emerge unscathed.”
Other key insights from the study include:
