Tremor Technologies, Inc., the leading online reinsurance pricing and placing platform, reports a strong correlation between the likelihood of a successful allocation and the number of points in a reinsurer’s supply curve suggesting that reinsurers who provide richer supply curves are more likely to hit their target. In effect, rich supply curves as part of the anonymized aggregate supply that the cedent sees are more likely to be realistic and influence the cedent’s final pricing, leading to a successful allocation for the reinsurer.

Supply curves are fascinating – they capture reinsurers’ unique strategies and risk appetites in a way that only Tremor’s modern market tech and confidentiality rules can. How do reinsurers use them in practice? In this post, we analyze real supply curves and find a wide variety of curves and a wide variety of appetites, with one particularly interesting finding: based on our estimation, the reinsurers who put more effort into their curves are more likely to get the allocations that they want.

The current renewal season has been one of the most challenging in decades. With many cedents struggling to find the capacity they need and many reinsurers waiting to see what the rest of the market does, it is easy to feel like the market has stalled. It doesn’t need to be this way – with a modern market design and proper incentives, placements go from contract to coverage in a fraction of the time.