Pandemic fails to stop migration of liability run-off portfolio

The COVID-19 global pandemic has been highly disruptive for many businesses, but one insurance industry business managed to migrate a large architects and engineers liability run-off portfolio right in the middle of the pandemic.

The firm in question is Pro Insurance Solutions, and Robert Buchberger, the company’s head of Germany, told Intelligent Insurer that following the migration in April 2020, Pro has been “running all claims operations remotely thanks to a ‘home office’ strategy implemented three years ago”.

The company expects to see an increase in run-off activity in the US, Latin America and the EU, some of which will be Brexit-related.

“In general, we expect an increase in portfolio transfer activities,” Buchberger added.

“Generally we are seeing reinsurers globally being a little more optimistic, but cautiously so. Legacy solutions, capital efficiency, and balance sheet-strengthening products are of course in demand, although we are not aware of any reinsurer prepared to take on COVID-19 risk directly.”

Buchberger pointed to several challenges the firm is facing, such as helping its clients to adapt to the new remote working normal and maintaining business as usual when handling complex legacy business.

“This is coupled with the fact that clients are focusing a lot on internal issues, and partly reducing outsourcing activities with such volatility in the global economy, although this has not impacted our business relationships.

“Pro expects the current pressure on insurers to accelerate new run-offs entering the market.” Robert Buchberger, Pro Insurance Solutions

“In our disability claims activity we expect an increase in frequency due to COVID-19-related mental health challenges,” he said.

In terms of opportunities, he highlighted a medium to longer-term opportunity for the legacy sector.

“Pro expects the current pressure on insurers to accelerate new run-offs entering the market, with insurers looking very closely at their books of business and how complex long-tail claims may develop as a result of this crisis,” Buchberger explained.

“Pro intends to further scale our complex claims capacities and enhance our current claims management and portfolio analysis activities with data-driven strategies—digitising and using data this way is the future direction of travel for the run-off sector and we intend to stay at the forefront.”

According to Buchberger, the legacy firm plans to extract yet more value from its “expert volume bundling”, so clients can rapidly streamline processes and reduce manual tasks and increase the efficiency and accuracy of claims handling.

“Pro has developed a software platform, Pro Claims Accelerator, to support this and continue to build out its capabilities,” he concluded.