29 October 2014 News

Evolution not a choice in changing market

Adopting a long-term strategy able to adjust to a rapidly changing reinsurance landscape should be top of the agenda for reinsurers—but there are players that refuse to evolve.

That is the view of Andrew Bustillo, president and CEO of BMS Intermediaries. He told PCI Today that the future offers both challenges and opportunities, but he added that he has been surprised to see some players refuse to change.

“Fundamentally, the economics of the reinsurance broking model and the transfer of that risk has changed and become more competitive. This is causing huge amounts of pressure within the industry and it brings an opportunity to think about where we want to be in the next five years and how we want to play in this new world,” he said.

“But, what has surprised me is that some people haven’t accepted that things are changing. It is fair in some ways—it can be hard to change your business.”

With regard to the main issues worrying clients, Bustillo said that distribution and growth opportunities are top of the list, as well as trying to understand how the influx of alternative capital may affect their futures.

“By and large, reinsurance pricing is not a key concern of mine. More of an issue for me is finding the right structure for where we want to go. There’s also interest and concern around the scary losses such as terror, systemic or pandemic losses and cyber,” he added.

Speaking about the PCI annual meeting, Bustillo said that the focus on technology had been well received, specifically referencing cyber risk and the challenges surrounding it.

“Buyers and sellers of cyber are all struggling to understand how to underwrite the risk and what the risk is. But, over time, as losses do occur, there will be data around how to best manage the risk and how to provide meaningful re/insurance capacity, so the theme of the conference has been very apt,” he said.

Talking of the US markets, Bustillo said that BMS is in regular discussions about how and where clients can expand their global footprint.

“We’re having lots of discussions about how we can access, for example, the Lloyd’s Market more efficiently, or what can we do in Canada. Overall, I think US companies are looking abroad and seeking our input in those areas.”

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