Supercede’s Rose: Cedants in “firing line” for renewal season turmoil
The quality of data and the manner in which cedants are presenting it to reinsurers ahead of key renewal periods has been a big factor behind some of the turmoil and delays the market has experienced, according to Supercede co-founder and president Ben Rose.
Speaking with The Insurer TV’s Close Quarter programme in a joint interview with fellow co-founder and CEO Jerad Leigh, Rose acknowledged that collating and presenting data in a way that makes it easy to use has always been a pain point for the industry.
But given the resources available to cedants to help improve data quality, Rose believes “they’re a little bit in the firing line at the moment, because they haven’t really got anybody else to blame”.
“It's their data at the end of the day, and while in the past, they’ve been able to get away with not doing too much to make sure that it's perfect as they've either been under-resourced, or they haven't been given budgets to invest in technology to improve the data that they've got. But, now that's really changed,”
According to Rose – who prior to co-founding Supercede was a senior associate at Aon and a property treaty underwriter at Acappella Syndicate 2014 – cedants are now increasingly under pressure to have sufficient data quality to be able to respond to an underwriter’s queries.
“For example, a reinsurance underwriter might say, ‘Okay, but what about if you had this other way of looking at it? Or if you had to respond to inflation? Or do you have to understand what a different structure might look like?’
“And at the moment, they're just not equipped at all to respond to those questions during the busiest time of year when they're trying to get deals done and they really should be able to,” explained Rose.
Cedants use reinsurance platform Supercede to collate, cleanse and share underlying submission data with their broker partners, with both cedants and brokers tracking the deals through the quote and bind process with more than 145 collaborating global markets.
For the fourth quarter of 2022 – arguably the busiest renewal period in the year – Supercede registered just over $24bn in unique underlying premiums.
Commenting on how things are shaping up for 2023 and beyond, Leigh said the platform is enjoying “a huge amount of momentum”.
He continued: “Part of the reason is the speed by which the clients can bring their data together, and the volume of clients that we have. But as clients are growing, and those clients are using us for all of their data preparation work, that number is going to continue to climb, probably quite exponentially going into next year.
“Going into 1.1.2024, you're going to see some very large numbers coming through with the data that's coming through our platform. And we're seeing that happening already,” he said.
Recent analysis by Supercede of treaty reinsurance activity found that an average 100 hours per treaty was saved by utilising Supercede’s technology.
Assuming the average cedant has nine bespoke treaty renewals, this extrapolates to $300mn saved in labour costs, as well as 20 percent in overall administration costs relating to reinsurance program purchasing, Supercede said.
Confidence around new risks
According to Leigh and Rose, the platform is more than just a software offering. “We wanted to create an ecosystem,” said Leigh, which would assist the industry with capacity solutions to help close the protection gap and also address newer risks, such as cyber.
“When we set out to build software for the reinsurance industry, it had to be designed to accommodate the cedant, the broker and the reinsurer, in all parts of that process.
“So, when we look at things like the protection gap, specifically when it comes to collating better data and bringing it together in a way that the reinsurers can assess it and analyse it more quickly, we can do this quite effectively,” he added.
Turning to cyber, Rose said it’s a “great” line of business to exemplify the lack of confidence companies have when it comes to entering new areas and where capacity is a challenge.
“We need to find new ways of giving people confidence to enter a space,” Rose said.
“One of the things we hear about, even in quite commoditised or general classes, is this pricing load that's given for uncertainty. So, a lot of reinsurers are already adding a price when they're not happy with the data that's provided to them.
“When you then look at newer classes, where there's not much to give the underwriters confidence, it almost becomes all pricing load, and not much actual price. I say the more that we can give to underwriters, in those slightly less familiar areas, to give them a chance of giving a price, rather than just pure pricing load, the better,” he concluded.