Demand for advisory services driven by Solvency II

Strategic advisory services are coming into their own in Asia: ratings, Solvency II and regulatory issues are all big topics in the region, David Flandro, global head of analytics at JLT Re told EAIC Today.

A big concern of some of JLT Re’s clients, particularly in the developing regions, is the rigorous and optimal quantification of risk.

“There are still companies which underwrite and buy reinsurance without detailed modelling, so some of those companies are getting a bit concerned. They’re saying ok, we’ve got more risk exposure now; what happens if there’s a Chinese typhoon, how do we quantify that?” said Flandro.

“We can bring some of those technologies to bear—even catastrophe modelling technology is relatively new to some companies.”

Flandro said Asian clients are very anxious to implement new technologies, including the best and most up-to-date economic capital modelling, the most comprehensive cat and flood models and the right kind of cover pursuant to that modelling.

“This enables our clients to grow in the right way, and that’s a big part of what we will be talking about at EAIC.”

Another concern in Asia is the ability to expand, said Flandro. Regional players in Asia have regional concentrations, so there is a desire to expand internationally. In order to do so, carriers often need a rating, they may need Solvency II equivalence or capital backing—and those are all areas in which JLT Re is very active.

“Of course, reinsurance can also help—it’s a form of capital so it can enable companies to expand internationally if they have the rating and the commercial reputation. If you are a medium-sized Asian company in a developing economy, international expansion is often a priority.”

He sees a whole spectrum of opportunities in Asia springing from issues such as new technology, low insurance penetration and regulatory changes.

“In India some of the regulatory restrictions on foreign ownership of insurance companies have changed recently, which is enabling certain large, global players to enter in more significant ways than they were able to a couple of years ago,” he noted.