It's becoming common for carriers to use the Web as an electronic conduit to organizations ranging from government agencies to auto repair shops. But carriers are branching off in a different e-business direction, interacting with risk management corporations and reinsurers in a secure Web-based environment where the object is to buy and sell risk."Bidding for treaty reinsurance is a fertile field," says Richard Roby, director of insurance research for TowerGroup, a Newton, Mass.-based financial service consulting firm specializing in technology.
"If a North American insurer is looking to take on some risk in Hong Kong, the company could participate in an exchange to identify a Hong Kong-based reinsurer that's eager to offload its exposure in Hong Kong."
Through this online exchange, the North American insurer could acquire a portion of that book of business in Hong Kong. An online exchange would facilitate all the negotiations between the two parties.
The New York-based Catastrophe Risk Exchange, Inc., (Catex) is an Internet-based, business-to-business exchange for insurance, reinsurance and risk management. Licensed by the New York Insurance Department as a reinsurance intermediary that acts in a neutral capacity, the exchange offers global pricing transparency and transaction detail for all lines of commercial insurance and reinsurance. The service is located at www.catex.com.
Composed of more than 170 corporations representing nearly 2,000 individual end users, Catex facilitates the real-time swapping of catastrophe exposures between interested parties within all lines of commercial insurance and reinsurance.
The participants are able to react to political, economic or climatic events that would have an impact on the assumption of risk. Because some participants may be skittish about revealing their identity, Catex provides buyers and sellers the ability to negotiate initial details anonymously.
Under a proprietary arrangement, Catex enables subscribers to develop a branded, customized distribution network, including a direct link to the Catex global trading system. Proprietary networks can run on in-house servers or off site through Exodus, a Web-hosting partner for Catex.
The exchange has posted more than 1,400 risks encompassing more than 500 completed transactions, and representing more than $3 billion of insured limit since it was launched in 1996. Posted risks have included aviation and aerospace risks, accident and health, marine, energy, political risk, weather, credit, auto liability and others.
Through the use of Extensible Markup Language technology, Catex can facilitate the exchange of information between buyers and sellers of risk within a 100% Internet browser-based trading exchange available 24 hours a day, seven days a week.
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