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23 October 2018 News

Cedants reduce size of panels

Many cedants are further reducing the size of their reinsurance panels while also rebalancing their reliance on some of the bigger, more influential reinsurers, within them, Jörg Bruniecki, head of global client & broker management at PartnerRe, told Baden-Baden Today.

He said insurers are becoming more tactical in the way they are working with their reinsurance partners.

“We observe a trend where clients want to reduce the number of reinsurance partners they work with on a strategic basis,” Bruniecki said.

He suggested the move has been driven by a re-evaluation by cedants of the number of partners needed to be successful. He said insurers prefer to work with a smaller number of strategic partners who understand their business and can help drive their agenda.

“They want to have stable, predictable partners who contribute ideas for business improvement. There are only so many partners to whom you can dedicate the necessary time to develop the relationship, which is driving cedants to focus on fewer key strategic partners,” he said.

In addition, within a panel, whatever its size, cedants often have one or two preferred partners. But, he believes, many cedants are also looking to reduce their reliance on these preferred partners. This can represent an opportunity for other reinsurers.

“Cedants are de-emphasising their relationships with those one or two main partners,” Bruniecki explained. “This gives us a great opportunity to grow with those clients and increase our share in the business.”

With competition so fierce, reinsurers need to focus on execution as this is where they will achieve differentiation, Bruniecki said.

“You have to understand the client’s challenges and offer them relevant solutions. You have to be more efficient in bringing those solutions to the market and to focus on cost,” he explained.

He sees PartnerRe as well positioned to compete in the current challenging operating environment.

“We, as a globally diversified reinsurer, can offer competitive solutions to our clients due to the diversification of our balance sheet. We are not as competitive as some in the alternative reinsurance market but we actively engage with insurance-linked investments (ILS) investors to offer our clients the most competitive solutions, turning it into what we call aligned capital,” he said.

The goal for PartnerRe is to be a one-stop shop and offer the best solutions to its clients, either using its own balance sheet, or by making ILS capacity available—all while leveraging PartnerRe’s technical expertise, Bruniecki concluded.

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