Global Reinsurance Masterclass series 6 - Intelligent Matchmaking
This Masterclass outlines the traditional sources of brokers' value and remuneration, and explores how current industry dynamics challenge the traditional model.
How to maximise value from broking
Changes in buyer needs and behaviours are having a profound impact on the operations of brokerage firms. Consolidation in the broking industry has been one outcome, yet further change will be needed for brokers to meet the challenges of current industry trends.
Traditionally, reinsurance brokers have been hired by cedents to help determine their reinsurance requirements, develop them into reinsurance programmes, and place shares of these programmes across multiple reinsurers globally. They therefore provide value for cedents seeking to buy reinsurance, by acting as advocates for them. However, as an intermediary in the cedent-reinsurer value chain, brokers also provide value to reinsurers: they help reinsurers to find a suitable set of reinsurance programmes to suit their risk appetite.
It is clear, therefore, that reinsurance brokers provide multiple services to the reinsurance market, but their major source of revenue primarily still comes from just one - their placement service. This Masterclass shows that, due to changes brought about by consolidation in the primary insurance industry, this traditional source of broker revenue is being eroded. The broking industry has responded with a corresponding consolidation, but size on its own is only one part of the solution for brokers in the new competitive landscape. This Masterclass therefore addresses changes in the brokers' business model that can allow them to add value and reap returns in the new reinsurance market place.