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Bitesize Impact 25: Tremor

Tremor is a programmatic reinsurance marketplace, Oxbow Partners InsurTech Impact 25 Member and recent ‘graduate’ of the Lloyd’s Lab.

The company has just announceda $10m funding round led by W. R. Berkley, who join existing corporate investors Nephila and Markel and VC Anthemis.

The hypothesis behind Tremor’s business model is that the traditional reinsurance pricing and placement model is both inefficient and opaque for most parties. Tremor brings programmatic auction technology (such as that used in the digital advertising industry) into the process. Cedents can ‘post’ their reinsurance order on Tremor’s platform and the system then runs batch auctions to match risk and capital.

To date, Tremor has completed six reinsurance placements with quotes exceeding $1bn and bound lines of nearly $500m from more than 70 reinsurers, ILs funds and Lloyd’s syndicates.

Tremor’s platform is designed to fit into existing workflows. Programmes are prepared by cedents or their brokers and are placed on the platform with documentation in virtual private data rooms. Reinsurers approved by the cedent can then review and evaluate the programmes before submitting bids. Tremor’s model does not therefore ‘disrupt’ cedents’ existing relationships with their brokers and reinsurers. For example, Tremor allows cedents to set liberal capacity caps for long trading relationships.

The team is now 20 strong and has expanded from their original office in Greenwich to an additional site in Boston. Moving forward Tremor will seek additional (and potentially final) funding in the next two years while continuing to grow the platform to include new products and market participants.

Sean Bourgeois, Founder and CEO, will be presenting the business at 14.45 on 10 September in the Fairmont Hotel in Monte Carlo as part of the annual Rendez-Vous meeting.

THE OXBOW PARTNERS VIEW

The reinsurance placement process is a well-documented inefficiency in the insurance industry. Tremor is hardly the first startup to address it – for example RI3K was an early mover in London – but its timing might be better than that of previous companies. We offer two pieces of evidence to support our thesis. 

First, Lloyd’s – one of Tremor’s target markets – is committed to digitising its marketplace, an objective which John Neal has reiterated in public statements since becoming CEO in October 2018. By the end of Q1 2019, 45% of ‘in-scope’ contracts were placed electronically in the Lloyd’s market; the target will be set at 70% for Q4 2019. Whilst not directly relevant for Tremor (and much more limited in its ambition), this initiative could be a valuable ancillary impetus for adoption.

Second, we are interested by the recent acquisition of broker Ed by BGC Partners/Cantor Fitzgerald. Cantor Fitzgerald was the first electronic marketplace for US government securities and now runs several other such marketplaces. One can only assume that they see opportunities to digitise the insurance market, providing additional impetus to this trend. 

Tremor might be in the right place at the right time.

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Dougie Willins

Dougie Willins is a Senior Consultant at Oxbow Partners and an analyst on our Market Intelligence product. You can reach him at dwillins@oxbowpartners.com.

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