Convex Group is a start-up specialty insurer and reinsurer focused on complex risks, launched with $1.8bn of committed capital in April 2019. Convex will underwrite insurance and reinsurance for “complex specialty risks across a diversified range of business lines” in London and Bermuda. The company aims to adopt a conservative investment strategy with a predominantly high-grade fixed income portfolio and duration matched to the profile of the liabilities.

Development of an Insurance-in-a-Box Operating Model

As a start-up, Convex had no legacy infrastructure or operations and was looking for an “out-of-the-box” insurance and reinsurance infrastructure and operations model, priced on a per transaction basis to enable it to achieve a new level of cost ratio performance.

Accordingly, Convex evaluated multiple vendors against three criteria:

• The extent to which each vendor could align on their operating model and provide an “insurance-in-a-box” offering
• The detailed service model and the ability of the vendor to underpin this model with technology
• The ability to mobilize experienced personnel quickly and execute in a short timeframe.

Following this evaluation process, Convex signed a long-term strategic partnership with WNS in April 2019. The key factors that differentiated WNS following discussions and site visits by Convex in Pune, India included:

• Their depth of insurance industry domain expertise and scale of investment in the industry. WNS has extensive experience in working with global specialty insurers and reinsurers and brokers  
• Their service excellence and risk management focus
• Their flexibility in adapting to Convex’s requirements at speed.

WNS has subsequently created  a onshore/offshore target operating model and has successfully implemented the technology stack in the initial start-up period of 6 months to manage the HR, Finance and Accounting services, and multiple Industry-specific activities including claims processing, and inward (re)insurance underwriting support. Convex will largely deliver product development and underwriting.

The technology being used is Sequel insurance software, already implemented in support of underwriting, with Oracle cloud software implemented in support of HR and accounting.

WNS Free to Offer Solution to Other (Re)Insurers

With this contract eventually aiming to move toward a per transaction pricing basis, WNS is banking on substantially increased revenues from the contract as Convex becomes established and captures market share in the reinsurance sector, with both Convex and WNS perceiving that the resulting lower cost from this new operating model will provide a source of competitive advantage. Indeed, Convex perceives that by using WNS and this operating model, it will be able to target a cost ratio of 10%-11% rather than the 13%-15% typically achieved.

Convex believes that as a first-mover and start-up with no legacy baggage it can derive greater short-term advantage from this solution than its established competitors, though WNS is free to offer the “insurance-in-a-box” solution developed for Convex to other (re)insurers and sees this as a major new market opportunity as insurers look to reimagine their operating models.