Our Marketplace - An industry without borders

Few if any insurance companies can conduct business without buying protection (reinsurance) for potential loss events that may include large individual losses or multiple losses caused by one single accident or occurrence such as a major storm, hurricane, earthquake, act of terrorism or a similar event. Hence, reinsurance is insurance protection for the insurer. A reinsurance contract offered to the insurance company is mostly supported by several reinsurers of which some are domiciled in countries other than where the original insurance policy was written. Each such reinsurer will in most cases also buy reinsurance protection for excess exposure and so on. Hence, reinsured insurance exposure and the related monetary transactions will quickly spread across the international insurance and reinsurance market. We often refer to the associated premium and loss details as technical accounting transactions. Thus, the individual reinsurance transaction begins at the original insurance policy level and thereafter flows throughout the entire reinsurance contract workflow. It is truly global in nature.

Insurance is the second largest segment of the U.S. economy. Insurance and health combined represent approximately a quarter of the U.S. GDP. We are aiming our products and services at the field we know best, i.e., the two-and-a-half trillion dollar global insurance industry and its 6,500 primary providers, approximately 4,500 captive insurance companies and numerous specialty insurance pools. Nearly all insurers support their books of business with reinsurance to (i) provide greater capacity, which allows for top line growth and (ii) protection to the bottom line, via the spread of risk, in the event of catastrophic losses.

Size of industry Of the $2.5 trillion dollars in premium written of which ~45% is US business approximately 80% or close to $2 trillion dollars represent reinsurance utilization throughout the industry. The industry’s IT spending has historically equaled 3% of net premium written, which is projected to grow to 6-7% by 2010. Thus, the current IT spending in the US alone of approximately $42 billion dollars is expected to reach over $80 billion by 2010.

Industry characteristics and trends September 11, 2001 was a wakeup call for the industry. Never before had an event like 9/11 illustrated the shortcomings of existing legacy systems in providing the necessary information required to manage an insurance company’s capacity utilization, risk accumulation and reinsurance protection. The concentration of capital at risk at one single location discovered by most insurance and reinsurance companies after the WTC attack made it abundantly clear that new and more efficient support systems were needed. This was further amplified by the impact of the stringent Sarbanes-Oxley Section 404 (SOX) compliance requirements. As a result, many companies ended up in receivership, were forced to stop writing new business and go into run-off or became unwilling acquisition targets by healthier competitors. For the first time insurance executives identified and expressed the urgent need to get the most critical back office processes streamlined and automated in order to provide the critical real-time information required for underwriting risks, capacity utilization and recovering large losses from the reinsurance market. Hurricanes Katrina and Rita further stressed the importance of expediting and identifying the financial impact of large losses to Wall Street and other stakeholders.