3 Obstacles to Scaling in Reinsurance (And How to Overcome Them)

This is the first of a series of articles in which I’ll share insights from our work with Bermudan Life Reinsurers, including how they’re unifying data and applying smart technology to drive better decisions and growth.

Part 1: Why reinsurers hit the growth wall

When our team sits down with Bermuda reinsurance executives, the conversation inevitably turns to growth – specifically, how to:

• Capture more books.
• Capitalise on hardening rates.
• Enter new treaty types (e.g flow).

All while navigating talent constraints and regulatory demands.

But these growth conversations quickly reveal a fascinating operational paradox. The same firms that expertly model complex risk scenarios for clients often struggle to model how their own operations will perform at 2x or 3x their current scale.

We’ve observed a consistent pattern.

Our clients’ limitations aren’t in capital or underwriting expertise – they’re in operational architecture. The systems and workflows that functioned adequately with two or three books simply weren’t designed to scale to seven or ten without proportional headcount growth.

The conventional approach – win a book, add headcount, repeat – worked in a different era. But in today’s environment, with tightening margins, scarce talent, and increasing regulatory scrutiny, that model creates diminishing returns at precisely the moment when scalability matters most.

So what’s the secret?

Building operational architecture that enables exponential growth with linear resources – creating advantages that enhance the talent you have and making the most of your pricing and actuarial expertise.

Three growth killers

First, let’s address some problems you might recognise.

When we analyse operational patterns in reinsurers, three structural barriers consistently emerge:

1 – Process fragmentation creates operational bottlenecks

A typical treaty onboarding process involves data intake, model configuration, pricing validation, legal documentation, and accounting setup – each step often involving different teams using different systems with manual handoffs between them. The fact that actuaries spend hours moving data from a cashflow tool to Excel isn’t just inefficient – it’s taking time away from the high-value work they could be focused on. That’s why what works for one or two books becomes operationally troublesome at four or seven.

2 – Spreadsheet dependency creates hidden operational debt

Excel remains the unofficial system of record for most reinsurers. Critical business logic lives buried in formulas, macros, and linked files, creating version control issues, formula errors, and key person dependencies that multiply with each new book. Some tasks eventually become too large for Excel to even open. Adding another system to solve spreadsheet problems typically creates more spreadsheets, not fewer – a counterintuitive reality that explains why so many transformation efforts fail.

3 – Siloed functional groups prevent efficient data flows

When actuarial, finance, risk, and investment teams operate with different tools and data standards, each new book multiplies these disconnections exponentially. Without a single source of truth, version control issues and different logic mean it’s not clear everyone’s using the same numbers. A single assumption change triggers cascading updates across systems with each team performing its own interpretation.

As the BMA’s reporting requirements grow more demanding and competition for technical talent intensifies, these operational constraints become strategic vulnerabilities.

The old playbook’s flaws

Ok, so what’s wrong with the conventional approach – adding headcount as you grow?

Well, this collapses under three structural flaws:

1 – Economic scaling becomes impossible

The maths is brutally simple. When each incremental book requires proportional staffing increases, your personnel expenses eventually outpace revenue growth. In a market where expense ratios face increasing scrutiny, this model puts fundamental pressure on profitability – particularly harmful where competitors can bid higher as they have lower costs.

2 – Talent constraints become business constraints

Bermuda faces acute shortages in actuarial, compliance, and risk. When growth depends on hiring, this talent crunch becomes a direct ceiling on expansion capabilities.

3 – Operational latency creates regulatory exposure

Manual, human-dependent processes can’t deliver the responsiveness that modern regulatory frameworks demand. Reinsurers with flexible operational architecture adapt quickly, while those with fragmented processes face implementation delays measured in quarters, not weeks.

The private equity catalyst

Market changes are also making this problem more acute.

The recent wave of private equity investment in Bermuda’s reinsurance sector has intensified the focus on operational leverage. PE-backed firms don’t just need growth – they need scalable infrastructure that allows capital deployment without proportional cost increases.

Speed to market is another critical factor. When setting up a reinsurer from scratch, you want to become operational ASAP. Scaling headcount is unnecessarily slow.

The positive impact of this ownership shift is that it’s driving a fundamental reassessment of the reinsurance operating model. The traditional approach – with its heavy reliance on manual processes and specialised expertise – increasingly conflicts with the scalability expectations of institutional investors.

This isn’t going unnoticed.

Industry leaders like Lloyd’s and the Bermuda Monetary Authority recently signed a partnership focused on fostering innovation and education in reinsurance. It’s a recognition that the old operational models aren’t fit for purpose in today’s environment—and a clear signal that the industry is preparing for structural change.

But while collaboration and thought leadership are essential, the real challenge is execution.

Next week, I’ll share part two of this essay, examining how forward-thinking reinsurers are breaking this pattern.

I’ll show how one Bermuda-based firm grew from managing one book to seven in just three years – while keeping their team size relatively constant and dramatically improving their control environment. Not through another bolt-on system or a massive platform overhaul. But by reimagining how information flows through the organisation and building process architecture designed for exponential rather than linear growth.

Do these growth killers sound familiar?

We’d love to hear about your experience, so feel free get in touch