Treaty business has gone on-line with inreon's new European catastrophe product.
Opinions differ widely as to the future of on-line trading in the reinsurance industry. Some say it will never happen – that reinsurance is too much of a people business, while others say it is an inevitable consequence of technological development. Perhaps wisely, the organisations offering the tools for on-line trading are keeping pretty quiet on the subject, instead focusing on their products' support of the conventional market. For example, at the launch of inreon's new European catastrophe product, Deputy CEO Kathrine Huelster commented that the severe hardening of the market will show an increased use in technology, reflecting the efficiencies necessary in the current climate.
For many years, it has been generally accepted that the re/insurance sector has been cost-heavy, and technology could be a means of cutting out swathes of expense. Inreon CEO Rob Bredahl estimated that reinsurers benefit from about 25% in cost savings from using the platform, a figure probably extended to brokers and primary insurers, he said.
The new European cat product aims to speed up the placing process, enabling faster submission and response times. The shared platform means the 13 current reinsurance members of inreon have an expanded distribution, according to Mr Bredahl, with 20 primary companies and 20 brokers now on the platform, he said.
As inreon Chairman Kaj Ahlmann pointed out, there have been many “false winds and mishaps” in the development of internet trading, and the question remains, why is it going to work now. In his view, it is a case of bringing together a sufficient number of players to create a competitive environment, with quality backing them. “We want to get the very best because it is a long-term relationship,” he said. Most recently, Bermuda-based Renaissance Re has joined the platform and other announcements are in the offing, both on the buying and selling sides of the platform. “This upcoming renewal season will be the most difficult ever in the history of our industry,” he commented. “Inreon offers the easiest and fastest access to the best capacity in the world. There is really no reason not to use it. Inreon is the right initiative for the industry at the right time.”
Most likely as a result of its pedigree – inreon was set up by Munich Re, Swiss Re, ICG and Accenture – the platform has been able to secure some exclusive capacity for European property catastrophe covers. Geneva-based Munich Re subsidiary New Re is just one of several reinsurers which have signed up to the initiative in advance of the 1/1 deadline. Clement Booth, member of the board of management of Munich Re, commented, “Through our subsidiary New Re we will be offering European property catastrophe cover with top security. For a limited period, clients will have the exclusive opportunity to access this capacity at appropriate rates via inreon.”
Though not offering exclusive capacity in the same way, Swiss Re is also supporting December's capacity sale. Rudolph Kellenberger, member of Swiss Re's executive board, commented, “Swiss Re is committed to supporting its clients in this time of difficult market conditions. We see the benefit of inreon in its extensive use of structured data which allows to more easily evaluate and more quickly respond to incoming submissions.” In addition to Swiss Re and New Re, SCOR, Partner Re and Converium are participating in the sale.
Under inreon rules, submissions must be turned around within three working days, with all quotes binding. Already more than 100 risks have been posted on the inreon platform, which is free to buyers, and other reinsurers actively trading on it include American Re, Hannover Re, St Paul Re and Wellington.
This ‘exclusive capacity' initiative, hot on the heels of launching the European catastrophe product, may prove to be the kick-start to the active use of the platform. With interest being shown from the new wave of re/insurers presently entering the market, Mr Ahlmann's prediction that inreon is the right initiative at the right time may yet prove correct.