Welcome to the ‘Innovation’ issue of Insider Quarterly!
Innovation, I’m sure many of you will agree, is a much over-used word in the (re)insurance sector, not because it isn’t needed and not because the industry isn’t capable of it, but – as with phrases like ‘efficiency’, ‘transformation’ and ‘electronic placement’ – the reality of what’s actually happening on the ground sometimes lags far behind the rhetoric.
Also, it can be a hard term to define – hence the meaningless stock photo of somebody apparently levitating a light bulb, while somehow illuminating it sans electricity (with the power of their mind, no doubt).
And let’s be frank, there is a lot of waffle talked about innovation to mask the fact that it’s actually “business as usual” and nothing new is really happening.
But in an environment where there is greater scrutiny in all areas, true innovation is becoming a necessity for many market players.
Investors and shareholders are watching companies carefully to make sure they are keeping costs under control and delivering promised returns.
Regulators are scrutinising every area of the market to make sure that true competition exists for buyers of (re)insurance products.
The Lloyd’s market, which recently said goodbye to its own great innovator – former chairman and co-architect of the Reconstruction and Renewal process, Sir David Rowland – is keeping a watching brief on syndicates to ensure they are writing profitable business
And counterparties at every stage of the (re)insurance process are watching each other to make sure they are getting the best out of their portion of the deal.
In all of these areas, there is scope for innovation and, to give the sector its due, the (re)insurance industry has always had to innovate to stay relevant to its client base.
So it is that Bernard Goyder’s lead feature, on the equally popular topic of InsurTech, details a number of ways in which standalone InsurTech companies, in-house ventures and partnerships between brokers, carriers and technology firms are making some real progress in introducing meaningful innovations that will shorten the (re)insurance value chain, speed up claims and cut costs.
But innovation isn’t just about cutting-edge technology or companies with unsightly names (where syllables have been replaced with single letters in a bid to look more urgent and contemporary). One of the biggest innovations in the sector in recent years has been in distribution, with the growth of the MGA. The jury is out on whether we have reached peak MGA and whether the promised benefits of cost reduction, agility and speed to market are all they have cracked up to be.
One thing is for sure – new MGAs keep appearing and, as Catrin Shi details in her feature on the topic, this growth in competition coupled with some challenging market dynamics mean that some pretty innovative underwriting is required by those MGAs that want to stay in business.
We have not one, but two opinion pieces on the cyber sector!
Overkill, you might feel. However, this is one topic where innovation quite clearly needs to be brought to bear on current market practice.
As Laura Sanicola’s article details, more dedicated cyber wordings are being brought into play in the market but, as she hints – and Shirley Beglinger’s subsequent article explores, the area of so-called ‘silent cyber’ threatens to overwhelm the market if these risks if not swiftly addressed.
We also have a host of technology, legal, investment and consultancy writers giving their own take on innovative approaches to managing the business of (re)insurance.
Let the innovation commence!
To read the Spring 2019 issue of Insider Quarterly, please click here.