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Trading risks: The value of relationships, models and face-to-face interaction in the global reinsurance market

By P. Jarzabkowski, M. Smets and A. P. Spee

Abstract

Over the past 20 years, the reinsurance industry has experienced three profound forces for change. First, technological change has improved information distribution and strengthened connections between global markets. Second, regulatory emphasis on global equivalence in trading practices has generated pressure for convergence across different marketplaces. Third, the widespread acceptance of vendor property catastrophe models has led to more standardised approaches to the evaluation of reinsurance risks, levelling the playing field for decision-making on at least some classes of business. These changes have intensified competition between reinsurance markets. Reinsurance trading centres in remote geographic locations, such as Bermuda, where it is more difficult to transact business face-to-face, have been able to write risk via electronic communications and now have very significant positions in the global reinsurance market. Simultaneously, Lloyd’s of London, one of the original reinsurance markets that is still very much based on the face-to-face approach, has demonstrated its capability to weather financial shocks and downturns and remains an important player in global reinsurance

Topics: HD61
Publisher: Aston University
Year: 2010
OAI identifier: oai:openaccess.city.ac.uk:16785
Provided by: City Research Online

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