Reinsurers need to innovate and embrace technology if they are to survive and thrive — and transformational disruption will need to be from within organisations as well as from the outside.

There is also a pressing need to attract more of the millennial generation to the industry to bring fresh ideas and impetus.

Kathleen Reardon, chief executive officer of Hamilton Re, and Kathleen Faries, head of Bermuda at Tokio Millenium Re, spoke on the subject at the GR Innovation & Insurtech conference, which was yesterday held for the first time in Bermuda.

The event was presented by Global Reinsurance and held at Rosewood Bermuda, Tucker’s Point.

During a fireside chat titled “A new kind of company for a new kind of world”, Ms Reardon led the discussion and described relevance, technology, culture and talent as four issues facing the industry.

She said everyone’s role on the value chain is evolving, and she said the industry had been bogged down by the old ways of doing things and had not been able to innovative and use creative thinking. She added that reinsurers have to find what is the next data insight that can add value to clients.

Ms Reardon said the industry was not giving the customer what they want, and that companies had to be bold and “go through disruption”, taking the standard norm and blowing it apart. By way of example, she mentioned disruption brought to other industries by the likes of Uber and Airbnb.

She also felt there were lessons to be learnt from the microinsurers, such as Blue Marble, of which Hamilton Re is a partner, that are trying to solve the problems of the “smallest of the small”, such as selling short-term policies to crop farmers in Africa, along with resilient seeds to solve their issues.

Another example cited was companies selling short-term car insurance that lasted for an hour or so.

“The industry can learn from these examples, but we need to adopt it more broadly,” she said.

Ms Faries, alluding to comments made at another conference by Mike McGavick, CEO of XL Group, said the issue for the insurance and reinsurance industry was that it is not delivering products in the way that many customers wanted them to be delivered. Ease of access was given as one example.

Regarding the issue of technology, Ms Reardon said companies need to harness new technologies to bring efficient automation to their core procedures, such as underwriting, and also use technology that can disrupt the market.

“What does the customer want that they don’t even know that they want yet?”

She suggested companies create a minimum viable product and then use it on a trial basis with early adopters in order to get their feedback, and added: “Don’t be afraid to fail or to pivot early.”

Ms Faries said: “At Tokio Millenium Re we have been trying to create this comfort zone to be able to innovate and fail and really have a more innovative approach to development.

“Unless our industry has the ability to shift that mindset relatively quickly we are going to fail and someone else will come in from the outside and they are going to disrupt us.”

On collaboration with start-ups, Ms Reardon said it was “best to look for a partner that has expertise in an area where you don’t have the expertise”.

She added: “A lot of the insurtechs have great ideas, very innovative and great products, but might not have access to the distribution and risk.

“Perhaps your company is a nice complement to an area that you are excited and passionate about, but you don’t have the innovation hub to create the actual idea.”

Ms Faries said Tokio Millennium Re was looking to invest in some start-ups and was “watching”. She agreed that the industry needs to be more open to partnerships.

The third key issue identified was culture. Ms Reardon spoke about the importance of companies looking at their internal structure.

“Do you have an open floor plan that is conducive to collaboration and sharing ideas? Do you have venues, think-tanks and working groups that you can cross-pollinate between departments and disciplines and actually bring out that best idea? These are things that we have at Hamilton; it’s that non-hierarchical platform,” she said.

Both women agreed that attracting younger staff — the millennial generation — was vital.

Ms Faries said: “I like the concept — it is someone else’s — that all these boards of directors really need to have young, millennial mentors.”

Ms Reardon noted that there are some new leaders coming into the ranks with a partial “analogue and digital world” background.

The need to attract younger people overlapped into the final issue of talent.

Ms Faries said the recipe for success was clearly changing.

“Anyone getting into the industry now needs to understand data and data science. We need to have talent that understands not where we sit today, but what we are going to look like five to ten years from now,” she said.

And Ms Reardon said there were movements under way to attract younger talent to a career in the insurance and reinsurance industry.

“We are hiring software engineers and programmers and they are embedded in with your underwriters and our risk analysis team so they can experience the process and improve it,” she said.

And using an analogy that would resonate with millennials, she added: “The talent that comes in today gets to be the disrupters, they get to be the iPhone 1.0.

“This is not an industry that has already gone through a transition and we’re just doing bells and whistles on the iPhone 8. This is a huge opportunity for people coming in, and the industry does not do enough to attract that type of talent.”