Monte Carlo Rendezvous 2018 Blog

Fifth Step attended the Monte Carlo 2018 Rendezvous to get the lowdown on what is happening in the complex world of reinsurance. The major story from our point of view was that Lloyd’s would reject any syndicate business plans that do not show a reduction in expenses for 2019, according to performance management director Jon Hancock who was talking to Insurance Insider magazine.

He warned that the market should not use top-line growth to address high expense ratios. “There is a balance between premium growth and managing expenses of course,” he said. “But if you have got a high expense ratio it is rarely a good idea just to grow your premium to manage your expense ratio. Normally, it is a much better idea to reduce your expenses.”

Hancock’s views are increasingly widely shared in an insurance world that is contemplating a smaller but more profitable Lloyd’s – certainly in the short term at least - as the market continues its overhaul of performance.

It is anticipated that the market will push back robustly on plans that predict growth based on unrealistic expectations of profitability. “If we see plans for lines of business which want to grow and yet show a sudden, miraculous improvement in performance, we will push back hard,” Hancock said. “We’ve got to believe these plans are realistic.”

It is the Fifth Step view that Lloyd’s will be looking to rely on firms such as Fifth Step who have been helping the market improve their productivity and performance over many years and that can support those best-in-class Syndicates who want to grow and adapt to this brave new world. It is inevitable that there will be a heavier focus from the Corporation, which is set on holding more Managing Agents to account as it addresses profitability issues.

In this environment it seems likely that technology innovation will play a pivotal role in helping Syndicates to drive profitability, this is one of the key reasons why the new Lloyd’s lab has been created as a technology innovation hub on Lime Street. This has seen ten Insurtech firms selected by Lloyd’s this, according to the Global Reinsurance Monte Carlo daily newsletter, was following more than 200 pitches from 36 countries,.

The newsletter reported comments from Lloyd’s CEO Inga Beal who said: “The lab is an important part of our future focused strategy which will further strengthen our position as the global centre for insurance innovation.”

The selected Insurtech take spots in the “innovation accelerator” from the 8th October in a “fast track fast fail environment” for ten weeks. The initial ten Insurtech firms selected by Lloyd’s are:

BelMead Tech: a claims support platform
Layr: An AI insurance platform
CargoSnap: a mobile transportation app
DropIn: an on-demand live video streaming platform
Insurecore: a digital-based risk appetite directory
Parsyl: a supply chain data platform
Geollect: proprietary intelligence software
ZASTI: deep learning and predictive diagnostic solutions
Qnity: digital insurance to allow individuals to design their own insurance solutions
iCede: cloud-based platform allowing large firm to interact across borders
Meanwhile, as Fifth Step reported earlier this year, the regulator’s penalties for data breaches are stiff, but a bigger problem could be an avalanche of claims from clients for data mis-handling, according to another report in Global Reinsurance published at the Monte Carlo Rendezvous.

The report explains that customers aggrieved at how their data has been misused could make firms pay for their perceived negligence. GDPR could be the new PPI in terms of claims for misuse of customer data. Fifth Step delivered a similar analysis it wrote for Insurance Times in May Companies are still way behind on GDPR'- Fifth Step CEO http://ow.ly/vhT030lNWsJ

The Global Reinsurance report warns similarly that people who suspect insurance companies may be storing or processing data illegally will almost certainly be encouraged to pursue a claim in much the same way as PPI claims.

“For the insurance industry, GDPR is a big shake-up, and will cause significant disruption to how insurers store, manage and process personal data. They could find themselves on the wrong end of various legal scenarios if they don’t put their house in order,” says a claims expert quoted in the report.

“They will face claims cases that are genuine where there has been negligence and damaging effects of misuse by the company of an individual’s data, and there will also be the no-win no-fee scenario.”

The main topic of conversation was the continued pressure on global insurance rates, cost pressures and the need for increased efficiencies. Competition is also driving the need for innovation.

The latest wave of M&A activity was also a major talking point as news broke in Monte Carlo that China Re is set to acquire Lloyd’s Syndicate Chaucer.

All in all, it was a fascinating and very well attended conference, which looks set to shape debate in the run up to the 1/1/19 reinsurance renewal season.