Convex, the specialty insurer and reinsurer launched earlier this year by Stephen Catlin and Paul Brand, feels that the rise of technology, combined with the fact it doesn’t have legacy issues puts it in a great position moving forward.
Reinsurance News recently met with co-founders of Convex, Catlin and Brand, to discuss the increased focus of technology on the risk transfer space and whether technological advances are expected to play an important role within the firm.
Convex’s Deputy Chief Executive Officer (CEO), Brand, explained that in principal, technology is expected to play an important role as it continues to change both the risks that clients face and also how Convex looks at those risks.
“If you think about the market that Convex is operating in, we are looking at the complex specialty insurance and reinsurance clients. In terms of how their risk is distributed that will not be as directly impacted by technology as more commoditised business, where people are trying to build systems that will automatically underwrite.
“Complex clients are after more bespoke solutions, they are looking for sophisticated services from their carriers and intermediaries. The more commoditised clients want simpler, faster services and a much lower transaction cost.
“I constantly think about how technology affects us; it allows us to understand more about what is happening in the world, and while it is not entirely predictable, it is easier to forecast using artificial intelligence, machine learning and those type of things, than it was before. Trying to exploit that change and reap its benefits for our clients and for our capital partners, seems like a smart thing to do,” said Brand.
Advancements in the use of data and analytics is enabling re/insurers to make better, more informed decisions moving forward. However, for most companies, legacy and outdated systems and processes can be an expensive and time consuming hindrance when looking to implement new technologies.
“We don’t have any legacy,” explained Brand, “So, we have considered what you actually need from an operating model and built things to suit the company for the future; it also protects the business as you think about how you’re using outsourcing and adding modern systems.
“We are really in a great position to move forward when so many of our competitors are struggling with legacy issues and grappling with technology.”
Expanding on the company’s outsourcing, Catlin, Chairman and CEO of Convex, explained how the firm is implementing horizontal outsourcing, which has two effects.
“One is that it means we get quality supports at a price that we probably couldn’t afford at the outset and secondly, it will save us a lot of money, about 3% on premium income and that is roughly a 5% ROE uplift before you even start.
“It also allows us to spend more time thinking about risk, how we can use technology to give us a material advantage,” said Catlin.
In July of this year, Convex announced the appointment of WNS as its main outsourcing partner, a collaboration that is looking to redefine the re/insurance market and move away from legacy systems and processes.
Commenting on the partnership, Brand said, “WNS is our main outsourcing partner and to building a platform providing us with support for services including underwriting, finance and HR.
“We went through an extensive process to choose our outsourcing partner and have been delighted with how WNS has engaged with us.”
It will be interesting to see how Convex develops over the coming months as the market enters the key January 2020 renewals season on the back of some positive momentum and evidence of increased discipline across the space.
As noted by both Catlin and Brand, the fact Convex isn’t tied down with legacy issues places the re/insurer in a good position to take advantage of technological advances that ultimately help to create a more efficient, valuable to service to clients.