How some reinsurers stand apart

Flaspöhler conducts an annual, global study designed to illustrate reinsurers’ competitive positioning and value proposition in relation to their peers. Here’s how the top reinsurers fared when brokers and insurance executives across EMEA were surveyed.

Flaspöhler (part of NMG Consulting, a specialist global consulting firm, focusing on the investments, insurance and reinsurance markets) conducted a global study drawing on the views of nearly 3,500 executives from more than 1,200 companies.

Flaspöhler | NMG Consulting produces a Business Capability Index (BCI) as a lead metric, designed to provide insight into a reinsurer’s (or broker’s) competitive position within any given segment. The BCI is a composite of many factors, including strength of partnerships, ease of doing business, innovation, client management, underwriting expertise, and capabilities within lines of business.

A BCI gives a sense of a competitor’s overall offer and value proposition in relation to its peers, and is particularly insightful when contrasted against relative pricing or financial strength. Price competitiveness and financial strength are not included in a BCI, which ensures it is strictly a value measure.

The results may be eye-opening. A quick glance at the BCI chart shows a strong correlation between value positioning and market penetration—perhaps a sign that customers prefer to work with capability-laden reinsurers.

Flaspöhler | NMG Consulting stresses that a BCI is a snapshot of a moment in time, although it can also be used to track changes over time. Competitors with high BCI ratings can reasonably—under ‘normal’ conditions—be expected to trade favourably, whereas those less well-rated by customers would typically need to rely on price differentials and/or superior financial strength to hold ground competitively.

Rick Flaspöhler, partner and co-author of the research, says this is significant in the context of the excess and alternative capital sources that have meant that soft market conditions continue to dominate the insurance world in 2017.

“While the large reinsurers have held firm in pricing and underwriting, reinsurers have also had to compete on factors relating to value—these days attractive prices are available from most competitors,” he says.

“Ease of doing business, good partnership credentials and access to trusted underwriters are leading factors in the selection of reinsurance partners, for insurers and brokers in Europe, the Middle East and Africa (EMEA). In addition, the technology revolution in insurance (insurtech) has gained significant momentum, and there are value chain pressures stemming from disintermediation.

“It’s thus unsurprising that insurers are looking to reinsurers for innovations and ideas on how to compete in this brave new world.

“As they adapt to cope with rapidly evolving customer demand, how are reinsurers faring? Are their strategies and efforts paying off in terms of delivering to insurers and brokers what they really want?”

How EMEA brokers rate reinsurers

For this part of the study, Flaspöhler | NMG Consulting interviewed more than 173 reinsurance brokers across EMEA and used this feedback from brokers to calculate a Business Capability Index (BCI) score for each reinsurer.

From this feedback, it was clear that Swiss Re is viewed by brokers as being the leading value competitor, as well as the most important (measured by number of brokers actively using Swiss Re). Swiss Re rated well ahead of its traditional peer group in this study cycle.

Several other competitors received high BCI ratings from brokers in EMEA, most notably SCOR, Hannover RE, Munich Re, QBE Re, Validus and RenRe—although some of these were low on market penetration.

How EMEA insurance execs rate reinsurers

For this part of the study, Flaspöhler | NMG Consulting interviewed more than 703 insurance executives across EMEA and used this feedback to calculate a Business Capability Index (BCI) score for each reinsurer specifically in relation to treaty business.

BCI results generated by insurance executives were more clustered for the leading reinsurers. Four distinct reinsurers were visible on penetration and a top three on BCI.

Swiss Re was again top rated by insurers, followed by Munich Re, Hannover Re and SCOR, which all scored highly for both market penetration and BCI. Although lower on market penetration, Gen Re, Nacional Re and VIG Re also all scored well.

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