M&A create a new ecosystem
An uptick in mergers and acquisitions (M&A) is accelerating a trend whereby the traditional re/insurance value chain is being replaced by a broader risk ecosystem with less defined boundaries between players, Victor Peignet, CEO of SCOR Global P&C, told Monte Carlo Today.
“The lines between brokers, managing general agents (MGAs), insurers, reinsurers and capital markets are being further blurred,” Peignet said.
The re/insurance market has recently seen a number of large M&A transactions. These further demonstrate the blurring of the lines between insurance and reinsurance, he said. He sees a new paradigm emerging that is structured around risk, capital, and technology.
The key components of the developing new risk ecosystem include three main offering streams: stronger and closer customer services; multiple conventional and new risk management solutions; and effective risk transfer and risk financing, he explained.
“Successful companies will understand all three and often combine them into one deal for their clients,” Peignet said. “In this risk ecosystem, market participants must either be the best at a single function within the system or be multifunctional and influential across the entire system.”
At the same time, the re/insurance environment is more vulnerable than ever to possible sudden and unforeseeable shocks from financial, fiscal, political, technological or regulatory sources, Peignet warned.
Risks linked to the global economy are more challenging than ever in terms of managing possible accumulations of exposures and losses/claims from one cause (cyber, supply chain, liabilities, etc), he added.
“Re/insurers have had to deal with such shocks in the past, but the recent acceleration of the industry transformation, in all respects including marketing, commercialising/distributing, servicing and carrying, is new,” Peignet noted.
The way forward is to keep all options open, he suggested. To manage the challenging P&C market, global re/insurers need to be diversified and have the capacity to invest in research & development (R&D), Peignet said, noting that such abilities are even stronger competitive advantages now.
“Size matters even more to have leverage and to be able to keep investing.”
