Traditional industry infrastructure and hubs being threatened?
Are the traditional industry infrastructure and hubs being threatened in the insurance and reinsurance industry? Short answer…Yes…
When there is over supply of capital, a slow growth demand for risk transfer products and new technologies disrupting distribution and other parts of the value chain: there are threats everywhere. But it’s the firms in the middle of the risk and capital that will get squeezed the most.
Particularly in the major insurance hubs, like London and Bermuda. A large amount of infrastructure, people, resources, etc. are all circled around these insurance industry hubs. But in today’s digital world, is this really necessary? Or is it super efficient already?
Industry leaders will have to evaluate this paradigm and determine where we are in cycle and is it sustainable. If the threat is real, a few questions:
- Will the idea of the insurance exchange come back? In the form of an online insurance exchange, if so, why do we need insurance centers in Bermuda, London, etc.?
- Is the consolidation occurring in the industry moving in the right direction? Are the firms acquiring Bermuda based reinsurers buying “crumbling infrastructure”?
- When will the insurance industry get together with the blockchain and disrupt this outdated model?
Once it happens you will see great savings to the bottom line, efficiencies, and the ability to pass risk quicker and easier. A risk bearing firm in middle of will be able to reinsure, insure, or transfer risk easier and quicker, at a lot less expense.
As a young person in the industry, it is important to be flexible and willing to move where the world takes me. I am ready for the shift from old brick and mortar hubs to online risk exchanges. For my Millennial followers, also be prepared. I am not saying pass up a great growth opportunity in your career because of this eventual shift – because it may never arrive and you will be kicking yourself.
How long will this take? That’s anyone’s guess but at the pace and growth of technologies today, I predict in the next 2-3 years we will see this shift. And I think you are seeing industry analysts and CEO’s already making moves towards efficiency.
It’s always a matter of time.
Bring it on.
Comment below with your thoughts or insights into this topic.