In conversation with Supercede: reinsurance renewals for 2023

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InsTech’s Henry Gale speaks to Supercede’s Ben Rose about the upcoming reinsurance renewals for January 2023, reinsurance market trends and how reinsurance technology can help alleviate challenges for cedents.

Why did you found Supercede?

As reinsurance professionals (Supercede’s co-founders are respectively a broker and an underwriter), we felt that our industry was being poorly served by technology. Because of reinsurance’s complex structures, specific requirements for data, and a unique approach to transacting it, traditional insurance software vendors did not adequately cater for reinsurance. This left reinsurance brokers and underwriters overwhelmed with manual work and lacking technology support.

Most existing reinsurance software solutions were built for a single company’s internal usage. As a result, it was difficult for firms to share and reconcile data between each other. Supercede was founded to develop reinsurance-specific technology that could make it easier for cedents, brokers and reinsurers to exchange deal information.

What challenges do cedents face when preparing for reinsurance renewals?

Each year, cedents must ensure that their reinsurance submissions get out to market accurately and on time. This is often a challenging task for three reasons: the data extracted from their underlying systems is rarely clean; what is required by reinsurers must be prepared manually; and the analysis that could help them make better buying decisions typically arrives far too late in the process.

What are cedents most concerned about as they go into their renewals for 1 January 2023?

From our discussions with cedents, brokers and reinsurers at recent industry conferences, negotiations are expected to be very tough. Reinsurers may offer far fewer quotes than usual for the time of year.

Cedents are concerned that the reinsurance they usually purchase may not be achievable and that they may be required to rethink their purchasing strategy across multiple classes of business at late notice. This leaves cedents limited time to prepare their submission packs for alternative structures, in a less forgiving reinsurance market where few reinsurers have time or inclination to engage with low-quality data.

How will factors such as declining property reinsurance capacity affect the work required for cedents in the lead-up to renewals?

Following Hurricane Ian, cedents are under pressure on property reinsurance, but this is not the whole story. Cedents are also likely to face pressure to prove the quality and coherence of their non-property portfolios.

More generally, reinsurers are reducing their appetite to provide capacity for low-layer attritional risks (the risk of losses that are not related to catastrophic events). This is expected to drive changes in how treaty reinsurance contracts are structured in 2023, which will create more work for cedents to prepare and validate their submission data. Cedents need to be able to generate, validate and pivot high-quality data at great speed, in response to rapidly evolving purchasing strategies.

How does Supercede’s technology help cedents prepare their data for renewals?

Supercede is designed to automate manual data manipulation processes that usually take months, to help cedents create fully digital submission packs for their reinsurance purchases.

Traditionally, cedents have had to manually create spreadsheets from database extracts, check them for mistakes and share the highly confidential output with brokers and insurers via email.

Supercede’s digital submission packs enable cedents to use their data more effectively. Supercede has built features such as instant year-on-year submission data validation, automatic generation of highly configurable profiles, and an AI to help identify stacked policies, in partnership with its clients. Supercede designed these features in an effort to help cedents improve efficiencies in manual data preparation.

The output can be shared with brokers without spending weeks of data cleansing, so brokers have more time to devise and execute a placement strategy for cedents.

InsTech released a report in July 2022 on how marketplaces and exchanges are reshaping insurance. What is Supercede’s perspective on how electronic collaboration between cedents, brokers and reinsurers can change the reinsurance market?

Inefficiency in the reinsurance industry has primarily been caused by manually rekeying information. Before Supercede, the cedent, its brokers and innumerable reinsurers would each create their own record of every deal: including the detailed underlying portfolio information, the structure and all the quotes, authorisations and signings.

With Supercede, a shared and validated record of the deal information reduces version control and contract certainty risks, whilst supplying live details on the deal to each party’s system in real time via API. This can reduce mistakes and time wasted while increasing trust in data and driving more informed decision-making.

Supercede recently carried out research on how much time and money the reinsurance industry could save with Supercede’s technology. How was that research conducted and what were its conclusions?

Supercede gathered and analysed treaty reinsurance activity information with a number of ceding insurers. The research revealed that on average, 100 hours per treaty could potentially be saved by using Supercede’s technology.

It found an 85% reduction in the time spent collating and validating information internally between reinsurance purchasing teams and their underwriting, claims, accounting and finance colleagues. In addition, there was a 20% reduction in overall administration costs relating to their reinsurance purchase.

What clients is Supercede working with?

Supercede’s first set of clients were mostly international specialty insurers such as Markel, Ascot and Hiscox. As Supercede grows, a wider range of insurers, brokers and a few reinsurers are reaching out to use Supercede’s technology to clean up their data processes. In total, over 140 firms participate on Supercede’s platform today.

What do Supercede’s cedent clients say about how the technology is helping their reinsurance purchase process?

Greg Waide, Head of Reinsurance at Ascot, said recently: “Supercede was very good at organising and managing our submission data. Having one workspace for our packs, which we can handily share with our brokers, makes it very easy to get everything sent off in time. Furthermore, we can now log all submission data, giving management a valuable year-on-year overview.”

What should readers do if they want to learn more about Supercede?

We are always keen to hear a client’s technology dreams and dilemmas. Please reach out to Supercede’s team of reinsurance practitioners and software experts at supercede.com.