11 October 2019ILS

Convergence: Insurance open protocol reporting will benefit the whole industry

The introduction of insurance open protocol reporting (IOPR) can benefit the whole industry, according to Michael Hamer partner and senior analyst at Albourne Partners.

Speaking at Convergence 2019 in Bermuda, he said IOPR creates a uniform reporting taxonomy, and provides investors with better information, while ensuring managers only have to create one standard report.

Many of the early reactions to IOPR have been negative, with many feeling it is too big, too complicated, too likely to be misunderstood, and requires unnecessary levels of detail. Industry players have complained it involves data they do not keep and is too resource intensive to implement.

However, investors want better reporting, noted Hamer. Investors are better partners when they are well-informed, he said, especially as many are making multiple investments in different managers and will need consistency to get a portfolio view.

Investors in ILS-related investments in particular are asking for more information about their investments, Hamer said, regularly asking about: designated investments; trapped collateral; fund risk profiles; portfolio composition; return breakdown; whether a release of collateral represents a commutation; if a front is used; who is responsible for late claims; and investor exposure to historic events.

Managers have been willing to supply a lot of information to investors on an ad hoc basis, he said, with investors developing their own questionnaires for managers. Information is often not stored on any central database, potentially leading to complications.

Meanwhile, different managers will be comfortable with different levels of transparency, while some information is specific to individual managers or strategies.

However, Hamer said the formation of the SBAI Insurance Working Group provides the ideal forum to resolve these issues, creating a standardised approach to investor disclosure.

Hamer noted that IOPR is not supposed to replace managers’ own reporting to investors, while the data it creates is not public, being available only to investors who ask for it.