Despite the wave of consolidation in the reinsurance industry at the moment, particularly affecting Bermuda players, the vast majority of market participants still believe that smaller, niche, players have a role to play, a survey has revealed.
An online survey by sister publication Intelligent Insurer found that some 95 percent of respondents believe that niche players still have an important role in the industry and that bigger is not always better when it comes to the reinsurance industry.
“At the end of the day, niche players emerge to address gaps or new exposures. Gaps and new exposures are constantly appearing and therefore niche players are safe,” one respondent commented.
Another added: “Appetite and spread of risk will always allow for smaller, niche players in the market. A small handful of large companies simply can't write everything and pay all of the losses, nor can they service that volume of risks properly. We’re also in an industry with such a low barrier to entry that start-ups will always be in play and by default create small, niche players if others are purchased or merged with larger carriers.”
Others added that the industry still needs experts in different fields, with one participant explaining that “if all other things are equal, like ratings and size, then expertise will be the differentiator between companies.”
A number of participants added that there is always room for innovative, forward-thinking and out-of-the-box solutions in the market with niche expertise, with one adding that “Nimble underwriting still comes from a small dedicated staff of professionals”.
On the opposite side, one participant said: “Size, diversity and a global reach will become ever more important as will access to different forms of capital and these are all attributes associated with scale.”