UBCNews - Business - GUARANT Implements DXC’s Industry-Leading Reinsurance Management Software

Starting point is 00:00:05 Garant has partnered with DXC technology, enabling it to use established enterprise platforms that support the complete reinsurance management lifecycle, from policy administration to claims processing. By aligning with a recognized technology partner, Garant reinforces its commitment to investing in solutions that deliver efficient reinsurance services while fostering industry partnerships. DX. C technology brings substantial. financial market leadership and industry credibility to this collaboration, serving over 80% of Fortune Global 500 insurers with its core insurance and reinsurance software solutions. The company's platforms currently support more than 200 customers across 60 countries, demonstrating a track record in delivering scalable, reliable technology to the global reinsurance sector. This extensive deployment base provides Garent with confidence that the selectorses, platforms have been tested and refined across diverse operational environments and regulatory jurisdictions.

Starting point is 00:01:12 Garant will use DXC's key reinsurance administration platforms, including SICS and DXC Assure Reinsurance, which together offer functionality for streamlining operations and reducing costs. SICS, an end-to-end administration system deployed by more than 100 insurance and reinsurance companies worldwide provides capabilities for managing complex reinsurance workflows. DXC, Assure Reinsurance, complements this foundation as a modular, integrated, cloud-enabled solution designed to improve claims administration and operational efficiency throughout the reinsurance management lifecycle. Independent validation of these platforms strengthens the strategic rationale behind Garence's

Starting point is 00:02:00 selection. Ceylent, a research firm specializing in financial services technology, ranked DXC, a sure seed, as a luminary in its report on reinsurance administration, recognizing the platform's technology architecture and breadth of functionality. Guarantees decision to partner with DXC technology reflects the company's proactive approach to meeting evolving market demands through strategic technology investments. As reinsurance operations grow increasingly complex and regulatory requirements continue to expand, the ability to use scalable, cloud-enabled platforms becomes necessary for maintaining a competitive advantage.

Starting point is 00:02:44 With this partnership, Garant continues to demonstrate a commitment to technological innovation as a foundation for concrete operational improvements, positioning the company to deliver quality service and operational responsiveness to its clients and partners. For more information, visit the link in the description. Great question. So facultative reinsurance is basically when a primary insurer, we call them the seedant, decides to transfer one specific individual risk to a reinsurer. The key word here is voluntary. Every single transfer is negotiated case by case.

Starting point is 00:03:20 The reinsurer looks at that particular risk, applies their own underwriting criteria, and then decides whether to accept it, reject it, or what? terms they want. So it's almost like, um, shopping each risk around individually rather than having a blanket agreement? Exactly. That's where it differs hugely from treaty reinsurance. Treaty reinsurance covers a whole portfolio of policies under one overarching contract. Facultative, on the other hand, zooms in on one specific risk at a time. It's customized coverage. Right. That makes sense. And I'm guessing this approach is especially useful for those high-value or complex exposures that don't fit neatly into standard treaty programs? Definitely. Think about it. Unusual risks, mega-projects, things that are just too big or too

Starting point is 00:04:12 specialized for your typical treaty. That's where facultative shines. It gives insurers greater flexibility and control over their reinsurance decisions. You could say facultative is the bespoke suit of the reinsurance world, while treaty is more off the rack. Ha ha! I like that analogy. So we've established what it is and how it differs from treaty reinsurance. But here's what I really want to understand. Why are we seeing industries like construction and energy infrastructure adopting facultative reinsurance at such an unprecedented rate right now in 2026? Well, there are actually three big drivers here. First, increased construction activity, especially in energy, infrastructure, and technology sectors is creating massive demand.

Starting point is 00:05:00 Second, you've got these specialized emerging risks that don't fit traditional molds. And third, there's a capacity crunch in certain areas that's making facultative more attractive than ever. Mm-hmm. Interesting point. Can you unpack that capacity issue a bit more? Sure. So limited capacity is a significant obstacle right now. In fact, 56% of market participants cited as a major barrier to buying enough facultative reinsurance. When treaty capacity is limited, which it often is for massive renewable energy projects or LNG developments, these projects turn to facultative markets to fill the gap. And I've heard something about AI and data centers playing a role here too?

Starting point is 00:05:43 Oh, absolutely. The rise of AI applications is spurring huge demand for data centers and all the supporting power infrastructure that goes with them. These are complex high-value projects. Securing adequate treaty capacity for them is challenging, so facultative becomes the go-to solution. You know, I think a lot of our listeners are probably wondering, what specific types of risks are we talking about here? Have you ever wondered what kinds of exposures actually drive this market?

Starting point is 00:06:13 Great point. Specialized risks are really driving demand. We're seeing 47 percent of decision-makers using facultative for environmental impairment liability. 42% for professional indemnity, and 34% for cyber risks. But construction and energy infrastructure are the big ones. Commercial projects, industrial facilities, infrastructure builds, mining, oil and gas, power generation, both fossil fuel and renewables. All of these need facultative cover. Wow. That's a pretty broad spectrum.

Starting point is 00:06:46 It really is. I actually remember working with a client on a massive wind farm project. The sheer scale of it meant we needed three separate facultative placements just to get sufficient coverage. It really drove home for me how indispensable this tool has become for large-scale projects. That's a perfect real-world example. And here's a telling statistic. 68% of senior insurance decision makers plan to increase their use of facultative reinsurance in the next two years. That's a massive shift in strategy. It is.

Starting point is 00:07:20 and that shift reflects something fundamental. Facultative reinsurance is becoming essential for modern risk management. It's not just a nice to have anymore. It's a must-have tool. That point about essential risk management tools sets up our next piece, the market dynamics and pricing pressures. But first, a quick word from our sponsor. When you're working through complex risks and need reliable reinsurance solutions,

Starting point is 00:07:47 Garant is here to help. We offer insurance underwriting, reinsurance solutions, risk assessment and consulting, and claims management for individuals, families, businesses, and insurers. Our focus is on delivering client-centered risk protection with integrity and innovation. Learn how we can support your risk management needs at the link in the description. Picking up on those essential risk management tools we mentioned, what market dynamics are shaping how insurers actually deploy facultative reinsurance? in 2026. Well, it's a balancing act.

Starting point is 00:08:22 The global reinsurance market entered 2026 with substantially more capacity overall, but competition is eroding prices. Fitch ratings actually revised their global reinsurance outlook to deteriorating for 2026 because of margin pressure. So there's more capacity, but prices are softening? Right.

Starting point is 00:08:43 Despite that broader softening, facultative reinsurance remains vital for me remains vital for managing those complex and specialized risks that simply don't fit standard treaties. The facultative market for construction, for example, is currently a mix of hardening and softening trends with challenges persisting for high value and specialized projects. I see. That helps clarify things. And what about other challenges insurers are facing? Social inflation and claims litigation continue to impact the casualty market pretty heavily, pressuring underwriting margins and leading to capacity adjustments.

Starting point is 00:09:19 This is driving increased demand for facultative reinsurance, particularly in transportation and workers' compensation. So to everyone listening in risk management or underwriting roles, how do you think this is going to reshape your strategy over the next year or two? It's already reshaping things. In North America, insurers are leveraging facultative reinsurance to capitalize on softer market conditions and expand into new areas like cyber and energy risks.

Starting point is 00:09:48 Facultative provides that additional capacity they need to underwrite larger or more complex policies, which opens up real business opportunities and growth. And I imagine that flexibility is key when you're dealing with risks that are, you know, constantly evolving. Absolutely. The flexibility and customized nature of facultative reinsurance make it a vital component of insurers' risk management strategies. It helps them respond to growing global demand to finance construction risks, manage emerging threats, and handle those one-off mega-projects that would otherwise be impossible to underwrite. Before we wrap up, what's your outlook for facultative reinsurance moving forward?

Starting point is 00:10:30 Despite the challenges, the capacity constraints, the pricing pressures, the future looks strong. The global reinsurance market is projected to grow significantly, and facultative held a 62% revenue share in 2024. Reinsurers are expected to face excess capacity and margin pressure, but there's real scope for more customized solutions in new forms of risk transfer. Facultyative reinsurance is becoming essential, especially as projects get bigger, risk get more specialized, and the world keeps changing. That's such an important takeaway. Reinsurance provides the precision and capacity that today's complex risk environment demands. Thanks so much for walking us through this. It's been incredibly helpful.

Starting point is 00:11:17 My pleasure. Thanks for having me. And to all our listeners, thanks for tuning in. If you're managing large complex risks, this is definitely a tool worth looking into further. Until next time.

UBCNews - Business - GUARANT Implements DXC’s Industry-Leading Reinsurance Management Software

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