I've been involved in a fair few (re)insurance-related debates over the years, and I've no hesitation in saying that this was one of the liveliest, with some strident views and intelligent commentary on where the fac market is headed.
Let no one say after reading this that we are burying our heads in the sand - on the contrary, I propose that that fac market is actually at the cutting edge of analysing portfolio management and future distribution trends.
Participants weren't shying away from some of the more sensitive topics, with the issue of expense one that was addressed head on. In a market where some of the most venerable institutions such as Lloyd's and Gen Re are actively questioning the cost of conducting business, this was hardly a subject to quietly put to one side.
As participants agreed, what we've seen of late has been a move by the market to put certain types of facultative coverage into facilities. And clearly this move has been driven, in part, by the wider recognition that as a market we're simply too labour intensive for particular placements.
I don't think is merely an issue for the fac market, by the way. I've often thought, and I say this with a heavy heart, that the cost of distribution in this world of ours is in some respects unjustifiable and we could really trim our cloth quite a bit - especially in the current trading environment where the cost of capital is low and there is little leeway with regard to underwriting costs. In this environment a focus on distribution seems natural.
For fac-sters some of this cloth-trimming will involve greater involvement in facilities, but participants at this year's roundtable agreed that there also has to be more savvy adoption of technology. The days when a queue of brokers stood in line to access a box seem increasingly historic, archaic and unjustifiable for all but the high-value, complex transactions.
Of course many of you would argue that we're already there - the market has evolved and we're actually pretty switched on when it comes to embracing technology and how it can aid distribution. This is true to a point, but it seems to me that the level of argument generated at this year's roundtable suggests it is still a sore point for many.
Looking more long-term, a number of participants suggested that a clear trend that will emerge is the growth of more directly placed business over the next 10 years. As one suggested, there will be "disintermediation at the reinsurance level because I think there will be more synergy and more partnering between reinsurers and insurers, not the largest groups but the smaller ones, in bringing product to market".
Expense in the spotlight, the operational efficiencies of distribution, and the possible medium-term move towards disintermediation... a lively discussion indeed.
Enjoy the read here,
Marcus Alcock
Editor
Inside FAC