The global capital markets are becoming increasingly attractive to corporates in the communications and technology sectors as some reinsurers fail to keep pace with change.
And the trend will gather momentum unless insurers can think consistently outside the box and interpret better the balance sheets and risk landscapes of “commtech” companies with their increasing and dominating concentration on “intangible assets”, according to Peter Hacker, partner and head of JLT's global communications and technology group.
Hacker said that the dynamic pace of change in these sectors offered a unique opportunity for reinsurers to partner corporates as they embraced converging technologies and new risk financing techniques.
Convergence also meant that competitors might be suppliers and suppliers might be customers and this interaction and dependence required new risk approaches, he said.
Addressing an audience of insurance risk managers at JLT's global communications and technology forum in Switzerland, Hacker said: “Reinsurers too often think in a linear way, but technology related risks are circular and involving a material degree of volatility.
"Volatility is not just risk for the insurance carrier but equally a chance to differentiate and set a new standard. Too often we hear from reinsurers, if we can't model it we can't write it, but these are the new risks that customers face. In the past, risks were tangible now they are increasingly intangible.”
“Insurers and risk advisors such as insurance brokers must keep up with change including new acccounting guidelines, perspectives for Solvency II and best practices for transaction documentation,” Hacker urged.
“We must look at convergence as an opportunity to partner with insureds for structured re/insurance to broaden their income base rather than imposing further restrictions.
"Since the convergence between the communications, media and technology sectors will continue to blur and surpass the traditional boundaries if re/insurance does not keep pace then it is a matter of time until it will be surpassed by the capital markets.”
