The risk transfer relationship: Connections & touch-points (an interface)

Everyone always talks about the importance of the “relationship” in reinsurance and risk transfer.

While it’s often over emphasised as a key market driver, it’s still absolutely the case that relationships really do matter in this industry.

But perhaps a little too much still, while other parts of the risk to capital chain are overlooked and their importance under-emphasised.

Market chains can be thought of like an interface.

Dotted with many and increasing numbers of connections and touch-points, some of which are more effective or important than others.

The relationship is one of the key connections in the world of transferring risk.

But these connections between parties are set to become increasingly abstracted away from the physical, with ownership increasingly fluid as a result (I believe).

Hence, maybe we’re better off thinking about the different connections along the risk-to-capital value chain of the insurance and reinsurance sector as interaction opportunities.

Chances for parties to generate value for their clients and as a result generate some loyalty in return.

Historically, the “relationship” was seen as the all-powerful route to owning a client, especially in the reinsurance or large commercial insurance sector.

Brokers “owned” their client’s placements, which often meant an entire program.

Despite the fact that one broker may be perfectly good for one risk or layer, but another better for the rest. Historically that hasn’t always seemed to matter.

Loyalty generated by years of transacting together has, in some cases, led to less than optimal placement results though.

I regularly speak with ceding companies, insurers or reinsurers and large corporates or sovereign protection buyers, who say they aren’t being given access to the full-range of innovative risk transfer arrangements, or capacity sources, by their brokers.

Sub-optimal placements mean renewing the same old program, at hopefully increasingly favourable terms and that’s often enough for ceding company executives.

But perhaps the placements could be much more highly optimised, if a fresh look at the placement and strategy was taken.

Especially if a fresh look was taken at the many connections along the risk-to-capital-chain and work undertaken to identify how to optimise each touch-point, to transfer risk more efficiently and at lower-cost.

The relationship is just one connection or touch-point that can be optimised in insurance, reinsurance and risk transfer, albeit one that is repeated along the market chain (agent, broker, wholesaler, insurer, MGA, reinsurance & retro placements etc etc).

In some cases the relationships are so numerous that there are clear opportunities to make more direct connections in the chain, to transfer the risk more effectively.

Connecting risk to capital more efficiently and directly is something I write about all the time over at

In fact it’s a bit of a pre-occupation, as when almost any new initiative or start-up (insurtech or otherwise) emerges in reinsurance and risk transfer, one of the first things I ask is “could this be done more efficiently.”

That means efficiency in terms of speed, directness, cost, effort, as well as cognitive load on the client.

That last one is kind of key as well.

Cognitive load is something I’ve worked to reduce for users throughout much of my career, having led large teams of frontend design and development at internet companies, in addition to my work in risk and reinsurance.

Making it easy for people (users/customers) to achieve their goals is absolutely vital in every single industry today, although this is something that risk, insurance and reinsurance is really only just beginning to understand.

Hence, thinking of the connections in the risk-to-capital chain of the insurance and reinsurance industry as interactions, touch-points, opportunities to reduce the cognitive load, while improving the user experience and effectiveness of outcomes, is a good strategy to adopt.

These opportunities are many and varied, given the number of touch-points and interactions along the chain in risk and re/insurance.

This is the interface of the risk transfer market, offering incumbents and start-ups opportunities to target, enhance, speed up, or make more efficient, one or more of the interaction points along this still convoluted interface.

There is a wealth of opportunity for incumbents to do things better, generating greater client loyalty in the process and building relationships that matter and that will be rewarded for the right reasons.

I’ve said it before, companies and brands are interfaces, you’ve got to make them simple to use and interact with to generate the best and longest lasting client relationships.

It’s time to move beyond solely relying on the more traditional kind of relationships that the re/insurance market has been built on.

While still important, we need to think differently about these relationships, accept the fact that ownership is set to change and value generated at each touch-point will be apportioned differently in future.

A good way to do that is to start assessing the value you receive (as a client) at every touch-point and interaction with someone who hands you a bill for services along the risk-to-capital chain.

For those handing out the bills, it’s vital you look at your own services and measure the value you’re providing (if it’s none you’re in dire straits).

Savings and efficiencies are there for the taking for the strategically astute.

Perhaps more importantly, so too are innovation, new ways of doing business, more direct connections in the chain, as well as inspiration that will lead to new product design.

More to come on this in future posts…

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