IN SHORT

•  Reinsurers are adopting digital solutions to address problems and opportunities across the value chain.
• Although some reinsurers are developing tech innovations internally, partnerships with insurtechs are increasingly common and there is still significant room for growth in this space.
• There are many emerging technologies on reinsurers’ radars, but tools that optimise their capacity to collect and analyse data offer the biggest opportunity for value creation.

Insuring the insurers gives the reinsurance industry a unique perspective on the dynamics of risk and loss. They have a vested interest in helping insurers understand and price risk appropriately and operate more efficiently, plus they have the funds to invest in these improvements. 

Profitable insurance lines, where premiums more than cover the cost of claims, also contribute to maintaining or increasing the reinsurance capacity in the market. Ultimately, this delivers better insurance access and affordability for communities, creating a virtuous cycle.

With these goals in mind, partnering with, or investing in, insurtech companies can be a win-win for reinsurance. Over the past four years, insurtech has provided investors with solid returns — making these companies sound investment prospects. In addition, reinsurers can choose to back companies that solve the issues in the insurance supply chain that increase loss ratios.  

In the Gallagher Re Global InsurTech Report 2022 Q2, researchers note that volatility in global markets and increasing inflation have put pressure on start-up insurtechs worldwide. Like many small businesses, some will fail, but this also helps sort the strong performers from those with less robust propositions and structures. Many of the surviving insurtechs will also be open to new partnerships with reinsurers to provide a cash injection and stability.

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