Too many reinsurers are doing the same thing and those that can differentiating themselves most effectively can put themselves at a competitive advantage.That is the strong message to come out of a publication from PricewaterhouseCoopers, entitled “Daring to be Different”, which was released at the Rendez-Vous reinsurance event in Monte Carlo.One of the contributors, PwC Bermuda partner Arthur Wightman, said it was also important that reinsurers should communicate clearly to investors the nature of their business to differentiate themselves from the rest of the financial services sector, as well as other reinsurers.Successful differentiation translates into stronger share prices in relation to book value, PwC has found, a significant finding at a time when most of the industry is trading at a significant discount to their book value.It’s time for reinsurers to thoroughly reconsider their future strategies, Mr Wightman suggests.“The main drivers of value, such as distinctiveness, specialism, effectiveness and orientation with stakeholder interests have been discussed,” Mr Wightman wrote in the PwC paper.“Instead, strategies have been built on diversification as an excuse to be everything to everybody and the result is a commoditised and opaque industry.”With the risk environment going through a process of dramatic change, reinsurers will see their client base change significantly in the coming years, as the strongest economic growth comes from emerging markets.“Those companies which do not have a response for the future, which have not translated the emerging challenges and opportunities into a value accretive strategy or those who fail to communicate the underlying value drivers effectively to the markets, will lose their capital access and effectively be marginalised,” Mr Wightman added.Reinsurers need to focus more on long-term challenges than “managing the cycle”.“Ask yourself the question ‘why do investors own our stock?’ and decide who and what you want to be,” Mr Wightman said. “Diversification can no longer be used as a default position that supplies a rationale for a company’s existence.”Most reinsurers were in “a zone of competitive disadvantage” made up of undifferentiated companies, he said. “The reinsurers that will emerge with renewed with renewed investor interest will be those that move away from the undifferentiated centre by developing further and utilising their superior risk insight, operational infrastructure, client relationships and understanding of investor risk appetite to promote their future growth prospects.”An PwC analysis of 33 unnamed wholesale insurers put just three in the zone of competitive advantage, eight in the zone of undifferentiated competition and the remaining two-thirds in the zone of competitive disadvantage.In an interview, Mr Wightman said the Bermuda market had shown an ability to change itself and that its reinsurers would need at the forefront of continuing strategy evolution.Sidecars, which originated in Bermuda, and catastrophe bonds were good examples of how the industry could present a relatively easily understandable, non-correlated and short-term investment option for the capital markets, he said.The full paper is available from http://www.pwc.com/gx/en/insurance/daring-to-be-different. jhtml