Tremor Launches Revolutionary Cross-Placement Optimization Tools
Tremor Technologies, Inc., the leading online reinsurance pricing and placing platform, has launched powerful cross-placement optimization tools enabling reinsurance buyers to get best execution for all of their reinsurance placements simultaneously.
“Reinsuring a risk or treaty is never contemplated in isolation. Every decision to transfer risk is made considering the overall portfolios of both the insurer ceding the risk and the reinsurer taking it on. Most reinsurers prefer to take on a diverse slice of a cedent’s risk, and most cedents need reinsurance across their entire portfolio. Since our goal at Tremor is to improve the allocation of risk – not just the syndication of individual placements but the allocation across placements as well – we are excited to announce powerful additions to our platform that accomplish this”, said Sean Bourgeois, Tremor’s CEO.
Tremor Multiplace™ determines prices and allocations for multiple placements simultaneously while automatically managing cross-placement concerns. Tremor Panorama collects full information about cross-treaty preferences up front and modern optimization tools find the optimal way to transfer risk.
Tremor Forwards™ help manage commitments across placements that have different renewal periods. Today, cedents and reinsurers make informal agreements when cross-placement preferences span placements that renew at different times – Tremor Forwards™ captures these informal commitments and integrates them within the overall placement process on the Panorama platform.
With multi-treaty placements, it is important to consider promises the cedent has already made as well as the cedent’s overall need for coverage. Cedents can indicate that limit should be reserved on one or more treaties – for example, $5M will be reserved for a specific reinsurer across two treaties being placed. The cedent can also require cross-treaty participation – for example, a cedent can require that a specific reinsurer participate on the property catastrophe treaty (at least 20% of its line must be on the property catastrophe treaty) and that another reinsurer participate on the motor liability program (at least 10% of its line must be on the motor liability program). Participation constraints can be per-reinsurer or global, and they help the cedent guarantee participation across both popular and unpopular treaties powered by technology.
When multiple programs are placed simultaneously, reinsurers have rich tools to express contingencies as part of their authorization. A reinsurer may add a subjectivity to indicate that at most 50% of its total allocation is on the cedent’s property catastrophe program – that is, every $1 of property catastrophe risk they take must be balanced by $1 of risk on other placements. Tremor ensures that everyone’s final lines meet their subjectivities powered by optimization technology, even contemplating subsidies between placements when necessary so that all programs are placed optimally.
When programs place at different times, Tremor helps cedents capture the commitments they have and will make. When a cedent has already promised a line to a reinsurer, they can indicate a precommitment and Tremor will reserve capacity for them. When cedents want to make a promise going forward, they can indicate that they will set aside limit in the future based on participation now — for every $1 of coverage the reinsurer provides now, the cedent will set aside $1 (or $0.50, or $1.50…) on a designated future treaty. For example, an insurer has already promised a specific reinsurer a $5M line on the current property catastrophe treaty and, additionally, has promised $0.75 of limit on an upcoming motor liability program per $1 of coverage provided on the property catastrophe treaty now.
When insurers make forward promises, they can track and manage them in Panorama. Alongside the risk they are placing now, they can see the total amount, by program, that they are promising to reinsurers as a result of the placement. Insurers can cap it by indicating that they do not want to commit more than $50M on an upcoming treaty and Tremor will make sure that they do not overcommit. For example, an insurer will need to set aside $97.50M on its upcoming motor liability treaty and $82.45M on its upcoming clash program. If the insurer wants to limit this, it can click the controls button in the card and cap set-asides on the motor liability program at $90M.
Providing powerful cross-placement optimization capabilities like these is a revolutionary addition to the Tremor Panorama reinsurance platform. Cedents no longer need to accept suboptimal placement across “attractive” and “less attractive” placements and reinsurers can express rich preferences across them. These tools further Tremor’s goal of truly improving the allocation of risk for the entire industry, best matching risk to capital powered by modern technology.
Insurers, reinsurers and brokers interested in learning more about Tremor’s technology and how we can help are invited to reach out directly to the company by contacting Suzan Jo at firstname.lastname@example.org.
Tremor is a venture-backed insurance technology firm where world class computer scientists, economists, market designers and industry practitioners are working together to build a modern risk transfer marketplace. Tremor’s “smart market” platform incorporates intelligent market design, state-of-the-art auction technology and sophisticated optimization techniques to vastly improve how risk is transferred around the world.
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