The role of reinsurance brokers has evolved well beyond the basic placement and relationship responsibilities of 25 years ago and will continue to evolve into new areas, according to the chief executive officer of Guy Carpenter.
In the 1980s, reinsurance brokers focused on placing coverage and maintaining relationships, Salvatore Zaffino told members of the Connecticut chapter of the Society of Chartered Property Casualty Underwriters (CPCU) last month.
Today, he continued, these intermediaries are continually innovating and often involved in claims administration, market security information, catastrophe modeling, risk management, runoff services, portfolio models and lots more.
“The role of reinsurance broker is more valuable than ever,” he said.
In the future, Zaffino, whose firm reported some $800 million in revenues in 2003, expects that reinsurance brokers like Guy Carpenter will also be involved in mergers and acquisitions, strategic advice, brand management, investment advice and other new areas.
“We will be much more consultative in our approach,” he maintained.
The role of brokers is not all that has changed. Zaffino noted that on Sept. 11, 2001, four of the largest reinsurers had the highest ratings from Standard & Poor’s, whereas today only one, Berkshire Hathaway, does. The roster of writers today is very different.
“A lot of reinsures have exited the market between 2001 and 2004,” he said. “Many companies have retired to the sidelines and left openings for new capital, mostly from Bermuda.”
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