Rethinking the role of the reinsurance broker

If sophisticated analytics represent one side of modern reinsurance broking, experience and institutional knowledge represent another, says Tim Releford, head of applied modelling and incoming president at Holborn Corporation.

Key points:
Loss patterns more complex
Judgement needed on analytics
Relationships still key

As climate volatility and increasingly complex loss patterns reshape the underwriting landscape, insurers have access to more sophisticated models, more data and greater analytical capabilities than ever before.

“Analytics inform judgement rather than replace it. The models and data available today are extraordinarily sophisticated, but ultimately somebody has to understand what those outputs mean for a particular client, their portfolio and their appetite for volatility.”

Yet greater analytical power does not necessarily make risk easier to understand. Slight deviations in a storm’s trajectory can produce dramatically different loss outcomes, while historical experience does not always provide a reliable guide to what happens next.

For Tim Releford, executive vice president, head of applied modelling and incoming president at Holborn Corporation, that uncertainty is changing what insurers should expect from their reinsurance brokers. The broker’s role, he argues, is increasingly about helping clients interpret what models are saying – and, equally importantly, understanding what they might not be saying – before translating that analysis into a reinsurance strategy appropriate to the individual business.

“Analytics inform judgement rather than replace it,” Releford said. “The models and data available today are extraordinarily sophisticated, but ultimately somebody has to understand what those outputs mean for a particular client, their portfolio and their appetite for volatility.”

That distinction matters because no two insurers have precisely the same objectives. Effective reinsurance strategy therefore starts not with a particular product or structure, Releford believes, but with understanding the insurer itself.

“You need to understand the client’s business philosophy, its volatility profile and its risk appetite,” he said. “Every client is different, so the reinsurance structure should reflect those differences rather than defaulting to a standard approach. There really is no cookie cutter solution.”

Modelling to decision-making

At Holborn, large loss analysis is used to benchmark the frequency and severity of losses against broader industry trends, while its proprietary HIDRA engine allows different reinsurance strategies to be tested, assessing alternative structures and the cost of transferring volatility.

Its catastrophe analytics add another layer. ModelFit and customised “What If?” scenarios allow frequency and severity assumptions to be isolated and modelled outcomes compared with actual loss experience.

But for Releford, the value lies not simply in producing increasingly sophisticated analysis. It lies in what happens next. A model can provide a range of potential outcomes. The broker and client must determine what those outcomes mean for the business and how they should influence decisions around risk transfer.

That increasingly requires different disciplines to work together. Brokers, actuaries, data analysts and claims professionals each see a problem through a different lens, with their collective expertise providing context that an individual – or a model – might miss.

“In a volatile market where reinsurers are increasingly selective, providing a transparent, data-driven perspective builds the trust needed to secure stable, long-term capacity and more favourable terms,” Releford said. The value of continuity If sophisticated analytics represent one side of modern reinsurance broking, Releford believes experience and institutional knowledge represent another.

Holborn is employee-owned and focused exclusively on treaty reinsurance. Releford argues that the continuity created by that structure has practical implications for clients, particularly when a programme is reconsidered at renewal.

Rather than approach each renewal as a clean slate, a long-standing team can understand why previous decisions were made, what has changed since and whether the assumptions underpinning the existing programme remain appropriate.

There is another human dimension to the broker’s role that modelling cannot replicate. Reinsurance ultimately brings together insurers seeking protection and reinsurers deciding where, and on what terms, they are prepared to deploy capital.

Releford sees the broker as both translator and advocate between those two sides of the market. As Holborn chairman and CEO Frank Harrison puts it: “The science of risk can take you far. But in the end, it’s the art of the relationship that gets the claim paid.”

For Releford, advocacy also means understanding the implications of a recommendation beyond the immediate placement. A reinsurance structure is not an isolated transaction; it can affect an insurer’s volatility, capital position and broader business strategy.

The direction of travel is clear. Modelling will become more sophisticated, datasets larger and the analytical tools available to insurers and brokers more powerful. But Releford does not see that diminishing the role of people. Instead, greater complexity increases the importance of combining technical capability with experience and judgement.

Holborn’s focus, he says, is therefore on continuing to deepen its analytical capabilities and develop the multidisciplinary teams surrounding its clients.

Tim Releford is executive vice president, head of applied modelling and incoming president at Holborn Corporation. He can be contacted at: timothyr@ holborn.com

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