Early in August this year, The Catastrophe Risk Exchange, Inc (CATEX), the technology company that drives the CATEX Global Exchange, announced the formation of a strategic partnership with Captive.com, the leading online information resource for captive insurance company agents and brokers.
A review of the CATEX and Captive.com business models offers a better understanding of the benefits clients may derive from this relationship.
CATEX has two principal businesses. Its global business-to-business exchange provides an internet-based platform for buyers and sellers of insurance and reinsurance. CATEX also provides its clients web-based technology solutions, including several award-winning systems for major insurers and brokers.
Captive.com is an internet-based location, where anyone with a computer and access to the web may learn about captives and other alternative risk transfer (ART) vehicles. Captive.com is an information-rich resource where visitors conduct research on ART topics, domiciles, legislation, industry associations, conferences and more.
CATEX global market
CATEX is licensed by the New York Insurance Department as a reinsurance intermediary that acts in a neutral capacity. The CATEX Global Market Exchange offers global pricing transparency and transaction details for all lines of commercial insurance and reinsurance. More than 2,500 registered users from 240 companies are listed on the CATEX exchange. To date, over 1,000 transactions have closed on CATEX systems, with $822m of premium and $6.5bn of limits. Posted risks have included facultative, casualty, property, aviation and aerospace risks, accident and health, marine, energy, political risk, weather, credit and auto liability.
The CATEX exchange is driven by software designed to provide proprietary, private domain systems for subscribers to customise and licence as part of their subscription to CATEX. Through its turn-key, internet-based distribution systems, the CATEX exchange can connect buyers of reinsurance to a broker; or buyers of reinsurance to a market; or to products used by a market to offer available capacity to brokers and cedants. Full administrative privileges rest with the host/operator and the system can be made available from the host's corporate website and may be operated independently of the CATEX global marketplace.
Through the use of extensible mark-up language (XML) technology, CATEX software enables the exchange of information between the buyers and sellers of risk, thereby empowering them to make better-informed business decisions within their own proprietary networks.
CATEX quickly realised that its technology was a valuable resource and should be marketed to the global exchange subscribers. There are three principal technology systems: a proprietary system; a trader-domain system; and the clearing and settlement system.
Using its proprietary system, CATEX shares the technology available on its global insurance marketplace by building custom, ground-up internet applications. Clients can select functionality from CATEX and add their own custom features, as well as integrate their business partners on the proprietary system. Other highlights include customising and branding to company specifications, online premium clearing and settlement, and claims-handling capability, as well as multi-language design to facilitate the conduct of business globally on the internet. The system may then become accessible from a company's corporate website and is branded with the appropriate corporate logo and colours.
The trader domain system is a copy of the CATEX exchange software individually modified for client companies. It is an ‘off- -the-shelf' product that is quickly modified and can be made available on the internet in as little as five business days. Each company owning a trader domain controls the content, the e-mail directory within the system, and, optionally, all the templates. Parties familiar with the CATEX exchange report that the system offers complete flexibility to conduct any type of business they choose.
CATEX is currently building an online clearing and settlement (C&S) system, which will be capable of integration with multiple platforms. The C&S system maintains transactional capabilities using an online management facility. C&S system software developed by CATEX can be made available from the CATEX trading system as well as the numerous trader domain systems operated by CATEX subscribers. The system can further be licensed for incorporation into a stand-alone ‘proprietary' system coded by CATEX. Using the system, premium and loss payments can be transferred directly between the transacting risk-bearers or alternatively via their broker(s). The system also contains electronic statement presentation and payment facilities, including the ability to offset two-way fund flows and incorporate net accounting procedures. Accounting data, automatically compiled in the system's transaction ledger, will assist underwriters and brokers in analysing the performance of their current programmes when they seek to renew business. The system also allows online payments between transacting parties.
Back in 1995, when the internet was in its infancy as a commercially viable business resource, John Salisbury – now the president of Captive.com – often found himself annoyed by the time and effort he and his staff had to expend to locate information and networking resources within the alternative markets niche. Up-to-date information on captives was scarce, colleagues who could share experiences were largely inaccessible, and there was simply no place to go to find a comprehensive collection of service providers which could help a captive with its set-up and operations.
In a moment of sparkling clarity during a retreat, John asked himself: “Wouldn't it be terrific if there were one centralised place on the World Wide Web where anyone with an interest in captives could enter and easily find all the resources he or she needed?” With that thought, the idea that has become www.captive.com was conceived. The site is up-and-running, and is continually being enhanced.
Professional contacts and networking opportunities abound, and Captive.com gives visitors access to some of the most knowledgeable experts in the captive field. The site also offers interactive training courses, a captive pricing model, an ‘Ask the Expert' forum and other interactive tools that make it easier for captives to conduct business.
As a licensed insurance company, a captive may enjoy the benefits that come with direct access to the global insurance market. Often, however, locating reinsurance markets can be a daunting challenge. Almost immediately after its site was established, Captive.com began to receive an ongoing stream of e-mails requesting help with the process. In discussions with CATEX, it became clear that, jointly, the two organisations might be able to provide that help.
The strategic partnership between the two companies enhances Captive.com's mission of offering a seamless interface which gives ART entities, and those who serve them, instant access to the information and resources they need in the day-to-day operation of their captives. CATEX technology brings to the site another interactive tool that takes the frustration out of a previously cumbersome procedure.
Captive.com's chief executive officer, Christina Mancini, sums up the relationship in a nutshell: “Given today's hardened insurance market – particularly in the aftermath of September 11 – all the rules surrounding reinsurance have changed. We are confident that captives will realise significant gains by having direct, online access to over 100 global reinsurance markets and brokers, at the click of a mouse.” Once again, technology is able to restore order from chaos.
Senior vice president at CATEX, Bob Graebner, adds: “The relationship between CATEX and Captive.com provides any ART entity seeking coverage the ability to instantly place its submission in front of interested parties from all around the world. It proves once again that Captive.com is the premier resource within this industry, offering sound advice and alternatives.”
In the first two months that the partnership was in force, more than 75 captive managers who are Captive.com subscribers had entered the CATEX Global Exchange, used its tools and gained access to the global market.
It has become something of a cliché to speak in a generalised manner of ways that the internet has changed the face of the insurance industry. In the case of the partnership between Captive.com and CATEX, the combination of technology and ideas provides a very real benefit to companies seeking to efficiently broaden their reach.