Online reinsurance pricing and placing platform, Tremor Technologies has announced the launch of cross-placement optimization tools, which it says will enable buyers to get best execution for all of their reinsurance placements simultaneously.
Tremor Multiplace determines prices and allocations for multiple placements simultaneously while automatically managing cross-placement concerns, and Tremor Forwards, helps to manage commitments across placements that have different renewal periods.
Providing “powerful” cross-placement optimization capabilities like these is a revolutionary addition to the Tremor Panorama reinsurance platform, the firm highlighted.
Sean Bourgeois, Tremor’s CEO, commented: “Reinsuring a risk or treaty is never contemplated in isolation. Every decision to transfer risk is made considering the overall portfolios of both the insurer ceding the risk and the reinsurer taking it on.
“Most reinsurers prefer to take on a diverse slice of a cedent’s risk, and most cedents need reinsurance across their entire portfolio. Since our goal at Tremor is to improve the allocation of risk – not just the syndication of individual placements but the allocation across placements as well – we are excited to announce powerful additions to our platform that accomplish this.”
With these optimization tools, cedents no longer need to accept suboptimal placement across “attractive” and “less attractive” placements and reinsurers can express rich preferences across them, Tremor explained.
These tools further the firm’s goal of truly improving the allocation of risk for the entire industry, best matching risk to capital powered by modern technology, according to the announcement.
Expanding on the different tools, Tremor explains that when it comes to multi-treaty reinsurance placements, it is important to consider promises the cedent has made as well as the cedent’s overall need for protection.
With Tremor Multiplace, cedents are able to indicate that limit should be reserved on one or more treaties and can also require cross-treaty participation.
For example, Tremor explains, a cedent can indicate that $5m will be reserved for a specific reinsurer across two placements and can also require that a specific reinsurer participate on say the property cat treaty, and that another reinsurer participate on the motor program.
“Participation constraints can be per-reinsurer or global, and they help the cedent guarantee participation across both popular and unpopular treaties powered by technology,” notes Tremor.
Further, when multiple treaties are placed at the same time, Tremor explains that reinsurers have tools to express contingencies as part of their authorisation. For example, the firm says that a reinsurer could add a subjectivity to indicate that at most 50% of its total allocation is on the cedent’s property cat treaty – that is, every $1 of property cat risk they take must be balanced by $1 of risk on other placements.
The firm said: “Tremor ensures that everyone’s final lines meet their subjectivities powered by optimization technology, even contemplating subsidies between placements when necessary so that all programs are placed optimally.”
Tremor Forwards will help manage commitments across placements that have different
The goal is to capture informal commitments between cedents and reinsurers, and integrate them within the overall placement process on Tremor’s Panorama platform.
“When a cedent has already promised a line to a reinsurer, they can indicate a precommitment and Tremor will reserve capacity for them,” Tremor explaied.
Additionally, when cedents want to make a promise going forward, Tremor’s new tool allows them to indicate that they will set aside limit in the future based on participation now.
For every $1 of coverage the reinsurer provides now, the cedent will set aside a certain amount on a designated future treaty, explains the firm.
For example, an insurer has already promised a specific reinsurer a $5m line on the current property cat treaty and, additionally, has promised $0.75 of limit on an upcoming motor liability program per $1 of coverage provided on the property cat treaty now.
“When insurers make forward promises, they can track and manage them in Panorama. Alongside the risk they are placing now, they can see the total amount, by program, that they are promising to reinsurers as a result of the placement,” notes Tremor.
Furthermore, the company adds, when insurers make forward promises,they can also cap it by indicating that they do not want to commit more than a certain amount on an upcoming treaty, and Tremor will then make sure that they do not overcommit.