It seems that technology products for the reinsurance sector are akin to London buses. You wait for ages, then several come along all at once.
One of the manifold to hit the market earlier this year is reway. Unveiled in Berlin and London with a high-tech, almost theatrical, presentation, reway is an auction site which essentially provides an internet-based and quicker version of the current business processes in the market. But where it particularly scores, according to reway's managing director Rainer Breeck, is in costs.
“Reway reduces the expenses in placement, acceptance and administration,” he said. In the future, it aims to offer additional services such as a linked portfolio administration system, he added.
In the meantime, reway itself is an easily navigable site, though still lacking in documentation and cash transactions. These are “not fully developed yet,” said Mr Breeck. He estimated it would take no more than one day's training to learn how to use reway. “We have tried to make it as easy as possible.”
Currently, the site offers a choice of 480 companies, each rated by Standard & Poor's, with which to trade. But only companies which have been specifically invited to make an offer on a piece of business are able to view it.
Access to the trading area of the site, originally by user name and password, can now been further secured with the use of a SecureID-Card, using digital signature technology to protect the information being transmitted. On the reinsurance side, both treaty (quota share, surplus, excess of loss and stop loss), facultative proportional and facultative non-proportional business can be traded across the site.
Once a posting is made – to the specified reinsurers – a three-day bidding phase for the contract follows. E-mail alerts notify the cedant when an inquiry has been made. If clarification of aspects of the business is needed, relevant attachments can be sent, with different information going to different bidders if required.
The reX part of the site shows the offer made by the bidder, including the percentage of the business they are prepared to accept. Because of the way reX has been constructed, it can provide a ‘market price' for a piece of business, calculating the weighted average of the presented capacity and offers. When an offer in reX has been accepted, it is legally binding.
“ReX offers more flexibility in creating workflows,” said Mr Breeck. “We offer the market more flexibility; we don't force any parties to do anything in particular.”
Currently, German reinsurer Gothaer Re, part of German mutual Parion, is the owner of reway, though Wilfried Muller, Gothaer Re executive board member, said it had “no political interest” and instead views reway as an investment opportunity. Soon, he said, an invitation will be issued to other companies to become shareholders in the company, which started operations at the beginning of this year with E250,000 in share capital, and a budget of DM10m.
Current projections are that reway will register revenues between E500,000 and E750,000 this year, and break even in 2003/2004. “Because of the importance of neutrality, reway is divided from the group, and has a separate service provider from the parent company,” explained Mr Breeck.
The platform “is open to everybody,” said Mr Breeck, “it is not limited to German companies or German-speaking people.” In fact, the platform exists in five different languages, recently adding French, Italian, Spanish and English versions. “We have a European-wide focus,” he explained.
Future offerings from reway could well include facilities such as a service warehouse, which, for example, could provide an actuarial tool to calculate motor third party liability. At the same time, “reway could go towards commodity-type rates, as we get more and more information,” Mr Breeck foresaw