There are three reasons why reinsurance management should be a top priority for insurers and they add up to millions of dollars worth of efficiency savings, says Tim Spencer, Duck Creek Reinsurance Management ‘powered by XL’, London Markets, UK, and Ireland
Reinsurance is a vital part of the insurance ecosystem, and yet the administration, calculation, and accounting processes between insurers and reinsurers are often siloed, with reinsurance activities spread over multiple spreadsheets, much of the time using old systems.
This lack of standardisation and manual processes is resulting in errors and slow processing times, particularly for claims, where inefficiencies are costing millions of dollars in lost income. For a single event, losses can reach tens of millions, while across the global market, the number can be in the hundreds.
For many years, the unique nature and complexity of reinsurance have meant that solutions to help overcome these operational challenges have been few and far between. However, thanks to automation technology and the dawn of modern reinsurance management systems, the situation is now changing.
For insurers or reinsurers looking to ‘cede’ insurance contracts or programmes to reinsurance companies via outwards, inwards, or assumed reinsurance processes, adopting these new systems and technologies should be a top priority. Not only do they bring multiple advantages, but the benefits are immediate.
Three reasons for action
Firstly, with automation capabilities, the time taken to undertake monthly or quarterly financial close can be significantly shortened from nine days to less than four days, meaning monies can be accrued earlier, helping prevent millions of dollars from being lost.
Secondly, with automation and improved administration processes in place, reinsurance contracts can be more accurately priced, helping meet contract certainty and stringent industry regulations. Such automation also results in shortened calculation times and fewer inaccuracies – a vital outcome for insurers seeking to build and maintain relationships with reinsurers and increase their capacity offers.
Thirdly, by applying intuitive technology that can collect, centralise and analyse data related to all reinsurance policies, claims recoveries can be easily searched and validated, meaning monies can be accrued faster. Modern reinsurance systems also have the ability to identify, account and address historic claims, which means claims leakage can also be reduced.
For these three reasons alone we estimate almost US$200 million is being lost each year due to slow financial closes, inaccurate pricing, slow claims recoveries and claims leakage across the global re/insurance market.
By modernising and automating their reinsurance operations with Duck Creek’s Reinsurance Management powered by XL system, re/insurers will not only be able to achieve increased operational efficiency by freeing up internal and third-party resources, but they will be able to harness real-time claims management, reduce final payment speeds, and ultimately save millions of dollars in lost income.
Explore how to centralise, streamline and automate all your reinsurance processes with Duck Creek Reinsurance.
