Reinsurers with richer supply curves more likely to hit targets: Tremor

Published on 1/25/2023
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Source: Reinsurance News

Reinsurance pricing and placing platform provider Tremor Technologies has reported a strong correlation between the likelihood of a successful allocation and the number of points in a reinsurer’s supply curve.

Reinsurers who provide richer supply curves are therefore more likely to achieve their target lines, Tremor suggests, particularly at time where price discovery has proved “almost non-existent” at renewals.

A supply curve is a graphic representation of the correlation between the cost of a service and the quantity supplied for a given period. For reinsurers, the number of points in a supply curve can be an important metric that captures the overall complexity of an authorization.

“As the number of points increases, so too does the allocative precision that the reinsurer will get; reinsurers with more points in their supply curve tune their line based on the final price chosen by the cedent,” Tremor argues.

More than 40% of Tremor supply curves include at least 4 points, which, according to the platform’s data, gives them a more than 80% likelihood of achieving or exceeding their allocation targets.