Insureware: macroeconomic trends decoded

Macroeconomic trends including soaring inflation, rising interest rates and the potential for a global recession are items that statistical solutions provider Insureware is taking in its stride.

Ben Zehnwirth (pictured), founder and managing director of the firm, explained that in many ways these are all positives for the company because it offers clients dealing with these challenges a unique software platform for P&C insurers and reinsurers: ICRFS.

“Our application is designed to measure trends in the three time dimensions—accident, development, and calendar—along with quantifying the volatility around those trends,” Zehnwirth said.

“Our modelling tools for multiple lines distinguish between correlations and common drivers, ensuring that reinsurers taking on P&C portfolios are assessing diversification risk.”

Zehnwirth explained that the solution’s sensitivity to inflation, interest rates, and general volatility in economic and social conditions, are important reasons for reinsurers to use the Probabilistic Trend Family modelling frameworks, and that demand for this product was the reason the firm is rapidly expanding its client base in Europe, the Americas, and Australia-Oceania.

“With all these sources of uncertainty, it is easy to overcompensate. While our software allows analysts and planners to run and compare future scenarios of their choice, we also are able to quantify trend changes very early.

“The tight feedback loop can inject some essential reality checks into pricing and valuation scenarios,” he added.

Recent events

On the COVID-19 pandemic, and more recently the war in Ukraine, Zehnwirth told Intelligent Insurer that initially it was challenging, as it was for everyone.

“Before the pandemic we travelled the world regularly to deliver training, conduct presentations, attend conferences, and otherwise engage with existing and prospective clients. That all came to an abrupt end when borders closed,” he recalled.

“However, despite the sudden change of work environments requiring remote access, and other issues, our ICRFS software application already had the necessary features to make the transition to a remote working environment seamless and straightforward.”

The firm’s clients were able to continue using the ICRFS application for their ongoing actuarial needs with minimal disruption or discontinuity arising from the pandemic, he added.

Looking ahead, Zehnwirth said his team are working closely with several reinsurance carriers, and as a result there are always opportunities coming forward. “The key component to any transaction is getting the price right—and sometimes the deals you don’t do are more important than the ones that are achieved,” he said.

With Insureware’s ICRFS technology, clients can access insights into trends, volatility, and diversification risk that other methodologies do not measure.

“Teams that work with us have the upper hand on supplying creative solutions at competitive prices that fairly assess the risk being transferred between the parties.”

He said that Insureware is “not your typical long-tail liability risk management firm as it is research and development-focused”.

“Our team of world-class statisticians originated many of the ideas that the industry now aspires to. They have published numerous papers in actuarial journals and preeminent statistical journals.”

Zehnwirth added that the Insureware team has advised on a wide-range of insurance matters including reserve due diligence, mergers and acquisitions, risk capital and Solvency II capital requirements for regulator and rating agencies submissions, as well as advising on underwriting and pricing, and reinsurance transactions.

“Unique collaborative partnerships are established and maintained with each client,” he said. “The partnership facilitates the growth of incomparable knowledge, benefits, and applications. Insureware creates and supports the only comprehensive, enterprise wide, long-tail liability risk management software in the world.”

With business conversations at Monte Carlo top of everyone’s minds, Zehnwirth said the main talking point for the industry as it heads into 1/1 renewals will be “inflation, inflation, inflation”.

“Reinsurers are facing pricing in a high economic inflation environment—when economic inflation has been largely benign for many years.

“The global pandemic with the ongoing supply chain problems around the world from lockdowns and travel limitations, coupled with the war in Ukraine, are driving inflation. These all have a flow-on effect to the re/insurance sector.

“Handling and managing expectations regarding future inflation will be vital as the industry heads into 1/1 renewals,” he concluded.