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 treaties but the allocation across programs as well – we are excited to announce two additions to the Tremor platform: Multiplace determines prices and allocations for multiple programs simultaneously while automatically managing cross-treaty concerns. Today, only a handful of the near-endless combinations of cross-treaty solutions can be brought to the table. With Panorama, Tremor collects full information about cross-treaty preferences up front so modern optimization tools can find the optimal way to transfer risk. Forward helps manage commitments across treaties that have different renewal cycles. Cedents and reinsurers make informal agreements when cross-treaty preferences span risks that renew at different times – Forward captures these informal commitments and integrates them within the Panorama process.
The best results for cedents and reinsurers alike come when treaties are placed and optimized simultaneously. With Multiplace features in Panorama, reinsurers and cedents indicate their cross-treaty preferences up front through subjectivities and participation constraints, giving Tremor the information it needs to find the best allocation of risk for everyone.
As a cedent
As a cedent, simultaneous placement is revolutionary – instead of having to individually probe reinsurers and negotiate to identify cross-treaty opportunities, Tremor starts with complete cross-treaty preferences from everyone and helps you optimize. Tremor can consider far more potential cross-treaty optimizations than personal negotiations can, and at the end of the day, everyone gets an allocation that aligns with their preferences.
You can also add participation requirements for treaties that are harder to place. Know that your property cat reinsurance will be harder to find this year? In the same way that reinsurers can add subjectivities, you can require reinsurers to participate across the board.
As a reinsurer
As a reinsurer staring down January 1st renewals, there is risk you like and risk you don’t like. You would prefer to take on a diversified slice of a cedent’s risk or cover only the parts you like; you do not want to reinsure solely the risk you do not like. Every placement is a balancing act to find an allocation that matches your preferences while meeting the cedent’s needs.
When treaties are placed simultaneously on Tremor, you get precise controls to manage the risk that you take on. Instead of haggling to trade off one line for another, you state up front which risk you prefer – only want to cover property cat risk if it is bundled with motor liability risk? Add a subjectivity to your authorization, and Tremor will make sure that the risk you take on meets your rules. Moreover, Tremor will automatically manage subsidies when you use subjectivities – Tremor will consider your total allocation and payment across treaties in order to give you the risk you want and maximize your line. (Note that subjectivities are not simply for multiplace placements – you can add subjectivities between layers of a tower, too.)
Just because two placements happen at different times doesn’t mean that cedents and reinsurers necessarily think about them independently – business relationships and informal agreements are common to ensure that cedents’ and reinsurers’ needs are met. Forward supports this through the following features: Reservations – A cedent can reserve risk on a program on a per-reinsurer basis based on prior commitments they have made. For example, a cedent who has promised at least $5M of limit to a particular reinsurer can indicate this on Tremor – Tremor will make sure that $5M of limit is reserved and not allocated to other reinsurers during the placement process. Forward commitments – A cedent can indicate that they will reserve risk on a future treaty based on coverage provided now, e.g. a cedent can indicate that they will set aside $1.50 of limit on an upcoming placement for every $1 of coverage provided now.
As a cedent
As a cedent, managing commitments is easy. Before the transaction, you will indicate individual reservations and forwards in the same way you set seller caps. When it comes time to set prices and terms, you can track (and bound) your forward commitments in Panorama.
As a reinsurer
As a reinsurer, Tremor shows you reservations and forward commitments so you can be confident that the cedent is honoring the agreements you made. When you see a reservation, you know that Tremor will not give that risk away to another reinsurer – if your pricing is out of range, Tremor will set aside the risk so that you can negotiate with the cedent after the placement. When you see a forward commitment you know that the cedent is committing to – and tracking – risk that they will reserve for you in the future.
Cross-treaty considerations are an important part of the reinsurance market, and Tremor offers powerful tools to help you manage them. If you want to learn more about how Panorama can help you manage them, we’d be happy to give you a demo or answer your questions. Reach out to us!