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Actuarial Science and Insurance Series: insurance-and-pensions

Global Reinsurance Masterclass series 4 - Be a better reinsurer

Changes in the global reinsurance industry are having a profound impact on the internal operations of reinsurance firms. Success in this environment increasingly relies on a firm’s ability to coordinate diverse pockets of specialised knowledge. This masterclass identifies the critical capabilities required to utilise these knowledge pools for optimum operational excellence.

Author(s): Professor Paula Jarzabkowski - Cass Business School; Gary Burke - Aston Business School; Adriana Allocato - Cass Business School; Rebecca Bednarek - Cass Business School

How to align structure, knowledge and roles for operational excellence

Competition in the reinsurance industry is increasing. Reinsurers must now try to outmanoeuvre competitors in their strategic groups and steal market share by entering new strategic spaces. Many multinational firms have entered new markets outside their traditional base to exploit opportunities for growth. The scramble for opportunity in China, or the wave of Zurich start-ups are prime examples. At the same time, these firms are underwriting more complex arrays of reinsurance deals to meet the evolving needs of large global clients. Many now encompass everything from stand-alone deals, to complex multi-line or multi-territory programmes, to exceptional covers that are unprecedented in size or complexity.

Such diversification creates significant operational challenges for firms. The technical, client and contextual knowledge which is so essential to evaluating complex deals no longer sits with one professional group, the underwriters, but is often distributed across analysts, modellers, account executives and senior management who sit in different parts of the organisation - sometimes in different countries! To succeed in this environment, firms will need to:

- Identify which knowledge pools are needed for particular types of deal - and which are not needed;

- Be able to combine efficiently whichever knowledge pools are needed to analyse the deal;

- Be able to prioritise what these different knowledge pools say about the deal, in order to align final decisions with the firm's strategy;

- Assess, develop, and integrate any new knowledge needed to access new strategic opportunities.

This Masterclass highlights three critical capabilities needed to integrate different pools of knowledge. Firms will need to develop all three capabilities, to ensure that they direct knowledge and resources efficiently to where they are most needed. They will use these capabilities as needed to write different types of deals, from the small and routine, to the large and exceptional.

The three capabilities also need to be aligned with the firm's overall strategic priorities and product offerings. For example, Bermudian reinsurers, whose basic strategic proposition was to provide capacity to support US catastrophe programmes, need to be excellent at combining in-depth contextual and analytical expertise. However, as these mono-line reinsurers diversify into new European markets in an attempt to access risk, they will need to find capabilities which can inform a whole-account approach to underwriting.

The third Masterclass in this series showed what type of business a reinsurer should specialise in if they are, or want to be, a particular strategic type. This Masterclass builds on this by describing the capabilities they need to develop in order to pursue this strategy, and how to shift between capabilities to make the most of opportunities outside of their traditional focus.

This Masterclass also includes a set of Study Questions that will help you associate some of the salient points raised with your own organisation's operations. The complete Masterclass file can be downloaded at the link below.

Attachment(s)
{Be a better reinsurer - Global Reinsurance Masterclass 4}{https://www.cass.city.ac.uk/__data/assets/pdf_file/0003/353901/be-a-better-reinsurer-masterclass-4-cass-knowledge.pdf}
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