Augmented Re to expand Bermuda operations
The law of numbers has stymied an open call to Bermudians to participate in the next wave of revolutionary insurance from the island.
Few with the right qualifications – degrees in computer science, statistics, or actuarial sciences – have applied so far to join one of the world’s largest insurtechs.
When asked about September’s call for Bermudian applicants, Envelop Risk chief underwriting officer, Ari Chatterjee conceded there were fewer qualified applications than he had hoped.
He said: “For Bermuda to be a larger player in technology, we need to have a larger talent pool to hire from, including university relationships and the fast tracking of work permits for fintech.
“The recent climate change conference showcased the great efforts the government has undertaken with Arizona State University.
“ Getting the right people in place is a slow process but one that needs to be traversed. We are hoping that in the next three to five years there will be a larger talent pool including young Bermudians looking to come back home from top universities.”
The door remains open for a company that will expand the types of jobs needed for a traditional insurer.
Just like the formation of several property catastrophe reinsurers was a combined watershed event in Bermuda’s insurance market in the 90s, observers are looking at climate and cyber-risks to determine which could be the first to bring the next revolution.
Don’t bet against cyber.
Mr Chatterjee said there are exciting opportunities for the company’s new reinsurance vehicle, Augmented Re.
He said: “Bermuda is our underwriting and risk capital centre, almost all underwriting decisions are made here. We are hiring for a variety of roles in underwriting, data science and software engineering.
“So far, we have a team of four, although we are expecting more to join us shortly.
“With Augmented Re we would project many more roles coming to the island that are not traditional insurance jobs.”
The goal is to build a Bermuda platform that will be the best equipped to evaluate and underwrite cyber reinsurance risks.
He said it will enable “a human underwriter to leverage orthogonal data sources to make better decisions and hence outperform the market”.
Envelop Risk developed a proprietary data-driven approach to target the rapidly evolving landscape of cyber-risks, through an enhanced level of protection to create lower loss ratios. Their focus is to meet the needs of companies seeking digital preparedness solutions.
Companies large and small need protection from cyber threats, and it is a need that can only grow. The best underwriting, diversification and portfolio optimisation can be better achieved through the use of technology, and Augmented Re will seek to improve the profitability of the business using technology.
Mr Chatterjee said: “Envelop’s AI model allows us to evaluate and structure cyber reinsurance deals using data sets covering a large proportion of the global cyber insurance market. It combines data from disparate sources and combines it with insurance features to accurately predict the threat landscape and the associated profitability.
“Envelop will continue to invest further in cyber reinsurance. We are already the largest reinsurer for excess of loss cyber reinsurance and at the same time one of the largest insurtechs in the world.
“Cyber reinsurance is the new property catastrophe with a growth rate of 30 per cent CAGR (Compound Annual Growth Rate) over last five years.
“The market is expected to double in the next two to three years with higher reinsurance demand.
“Augmented Re is a step towards the exponential growth. It will add ILS capital to flow in to cyber, something necessary for the market. With our technology and better than market track record, we have the chance to service our clients and investors better.”
The second Bermudian is already on board. Envelop Risk has already hired Abigail Exon, a Bermudian data scientist and software engineer.
Another Bermudian data scientist Emmanuel Smith joined Envelop Risk’s technology team in the UK office two years ago.
Said Mr Chatterjee: “Reinsurance is a data business. Unlike insurance, where it takes several years to build a large enough database to build AI, reinsurance gives us instant access to very large data sets.
“Combining these data sets with orthogonal data sets gives us a very different risk view that makes our models accurate.
“The role of a data scientist in reinsurance is to extract information from large data sets and work with the underwriters to make business sense out of it.
“Many of the first generation insurtechs have lost significant money by growing unprofitably. That business model is flawed since data acquisition in insurance takes much longer, and insurance is a local business where you have to recreate the infrastructure every time a new market is being entered.
“Reinsurance along with data science solves many of the problems the first generation of insurtechs faced, and we are happy to be a part of that story.”