Volatility drives demand for quota shares
In the wake of what may be record levels of
catastrophe losses in North America, demand
for quota shares is on the rise, Jorg Bruniecki,
head of global clients & broker management at
PartnerRe, told Baden-Baden Today.
This trend has been developing since it
first started to show momentum after the UK
changed the Ogden personal injury discount
rate, the rated used to calculate personal
injury losses, more than expected, causing
companies to revise their profit results midreporting
But this trend is gaining speed after
hurricanes Harvey, Irma and Maria (HIM) hit
North America, resulting in insured losses that
could reach $100 billion, in the third quarter.
“The distaste for volatility increased
massively even before HIM,” Bruniecki said.
He explained that if movement of 1
percentage point in a group’s combined
ratio causes a 10 percent fall in its market
capitalisation it can lead to dismissal of the
CEO. That shows how nervous capital markets
are around volatility, Bruniecki explained.
as well as to manage volatility. Reinsurance can
be used as an alternative to raising funds in the
capital markets without having to stream down
capital from the holding company to local
units, he explained.
Companies must have a dividend
distribution model and they have to deliver
on that. They therefore depend on having
constant streams of revenue coming from
affiliated companies to be able to pay dividends
and also to be able to look into potential M&A
“There is a lot reinsurance can do to support
that,” Bruniecki said.
PartnerRe is working closely with cedants
to develop a three-year target plan for their
businesses—even the majority that also work
He added that the company is reaping the
rewards of a new-found focus: the Bermudabased
reinsurer has recently exited the
insurance and primary business.
“Clients find it important that you are a
pure-play reinsurer,” Bruniecki concluded. n
“There are more requests for casualty
quota shares coming to the market as a result,”
Quota share is seen as a tool for capital relief
RPA more disruptive in re/insurance than ‘useless’ blockchain
The use of robotic process automation
(RPA) has the potential to become a greater
disruptor to the industry than blockchain,
the application of which in reinsurance will
be limited, Artur Niemczewski, CEO of Pro
Global, told Baden-Baden Today.
“Blockchain is useless in reinsurance,
because it aims to solve two problems—one of
which we are completely unable to solve, and
the second problem we don’t have,” he said.
The problem he believes the reinsurance
industry is unable to solve is the standardisation
of a single data entry point, and the massive shift
in behaviour it would require to achieve this.
“We have tried to solve the single data entry
for the last 50 years, and we’re still nowhere
near. It’s not about blockchain, it’s about
“If we can’t change behaviour then no
technology is going to help us,” Niemczewski said.
He cited multiple initiatives in the past—
such as a few examples coming out of the
Lloyd’s market—which have been unable to
solve the issue of the industry agreeing on a
standard for the entry of data.
The second problem blockchain aims to
solve—which he believes the industry does not
have in the first place—is the problem of trust.
Niemczewski examined parallels
between blockchain and the emergence
of cryptocurrencies such as bitcoin, which
have been widely used to trade securely with
“Blockchain can be brilliant but you have
to understand the application,” he continued.
He cited the diamond industry where the use
of blockchain is much better suited—especially
when parties may not trust each other.
“We don’t have a problem of trust, because
the re/insurance industry is business to
business; it’s heavily regulated, you have to have
your credit rating and you have to be good with
your money when it comes to claims payment,”
Niemczewski believes RPA will be a much
greater disruptor to the industry, where taskled
jobs will be eliminated and will encourage
individuals to improve their knowledge for
more complex, technical issues in claims.
“The quiet revolution is RPA; everybody is
looking at it already,” he said.
These processes can free up a lot of talent
to innovate more within the industry, he
explained, as well as provide opportunities for
better assessment and analysis of risk.
“If you have a greater pool of well quantified
data you can make much smarter decisions,”
6 | BADEN-BADEN TODAY | DAY 3: Wednesday October 25 2017 www.intelligentinsurer.com | www.bermudareinsurancemagazine.com