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The Need to Automate Reinsurance Programs

“Do you know where your children are?” That was a popular catchphrase in a TV public service announcement.

Do you know where your reinsurance program is? Many senior executives at insurers can’t say for sure.

Many insurers find it a struggle to document their ceded reinsurance program (the risk they have transferred to a reinsurer) in a way that’s acceptable to regulators—and senior management—because they have not automated management of ceded reinsurance policies, data and claims. According to a recent survey, only 14% of primary carriers have a reinsurance system. Most insurers still use spreadsheets or other manual methods to keep track of their reinsurance contracts and claims.

The NAIC Risk Management and Own Risk and Solvency Assessment Model Act (RMORSA) became effective in January 2015, and many states have adopted this model legislation. RMORSA requires insurers to have a systematic way of identifying, assessing and managing risk, and everything related to reinsurance is certainly part of it. Under it, insurers are required to submit an annual summary report to their primary regulator. A key part of complying with RMORSA, and other regulations, will be documenting reinsurance coverage in detail.

It is possible to comply with RMORSA without a true reinsurance system. But it’s a difficult, time-consuming process that doesn’t guarantee good results. Using a spreadsheet and other manual methods to track contracts and claims doesn’t give you everything you need in one place for regulatory filings. For instance, an insurer might not being able to identify out-of-compliance policies. This can occur when a reinsurer requires one or more exclusions in the policies it reinsures. If the insurer issues the policies without the exclusions, the policies are out of compliance, and the reinsurer may deny liability when there’s a claim.

But complying isn’t just a bureaucratic exercise. The RMORSA process also helps insurers get a clearer picture of their risks—and what could be more important for a company whose business is managing risk?

Implementing a modern reinsurance management system enables complete automation, controls and audit trails. It will generate Schedule F and statutory reporting at a click of a button. This, in turn, will reduce Schedule F penalties to the bare minimum.

Managing Risk

Regulatory compliance is hardly the only reason to use dedicated software to track ceded reinsurance. Intricate reinsurance contracts and special pool arrangements, numerous policies and arrays of transactions create a massive risk of having unintended exposures. Inability to ensure that each insured risk has the appropriate reinsurance program associated with it is a recipe for disaster.

An insurer must track and integrate many reinsurance processes. They include cession treaties and facultatives, claims and events, policy management, technical accounting (billing), bordereaux/statements, internal retrocession, assumed and retrocession operations, financial accounting, accounts payable, accounts receivable, regulatory reporting, statistical reports (such as triangulation per line of business, type of contract and region) and business intelligence.

With fragmented solutions such as spreadsheets and manual processes, things often fall between the cracks because there are so many reinsurance-related items to manage. Financial information for trends, profitability analysis and exposures becomes unreliable. Automating processes can reduce the chances of missing something important to almost zero.

Stanching Claims Leakage

One of the biggest problems is claims leakage. How do you know when a reinsurer owes your company money? Answering that question is not as straightforward as it seems, given the complexity of many different types of reinsurance contracts.

For instance, after implementing a reinsurance solution, a European insurer detected more than $1 million of overlooked claims. (You can’t file a claim if you don’t know you have one.) It contacted its reinsurer, which paid promptly.

The situation for insurers that don’t automate will only get worse. Many of the experienced reinsurance administrators have retired or will be retiring in the next few years, and there are few in the pipeline coming up. With reinsurance becoming ever more complicated, the only feasible answer for insurers is a comprehensive reinsurance system that puts everything in one place. The effort and cost are well worth the benefits in staff productivity, risk reduction, better claims tracking and improved regulatory compliance—to avoid RMORSA remorse and a host of other problems.

Ceded Reinsurance Needs SaaS Model

Ceded reinsurance management is still a technology backwater at insurers that manage their reinsurance policies and claims with spreadsheet software. These manual methods are error-prone, slow and labor-intensive. Regulatory compliance is difficult, and legitimate claims can slip through.

Insurers recognize they need a better solution, and there’s progress. While quite a few insurers have implemented a ceded reinsurance system in the last few years, many more are planning to install their first system sometime soon. They want to have software that lets them manage complex facultative reinsurance and treaties and the corresponding policies and claims efficiently in one place.

Insurers looking to upgrade any kind of system have better choices today than ever about how and where to implement it. While licensing the software and running it on-premises is still an option, virtually every insurer is considering putting new systems on the cloud in some way. Nearly every insurer expects vendors to include a SaaS or hosted option in their RFPs.

That’s not surprising. A 2014 Ovum whitepaper said 52% of insurers it surveyed are currently earmarking 20% to 39% of new IT spending on SAAS, while 21% are spending 40% to 59%.

The definition of SaaS is not set in stone, but let’s try for a basic understanding. SaaS normally means that the insurer pays the vendor a monthly fee that covers everything—the use of the software, maintenance, upgrades and support. The software is hosted more often at a secure cloud provider such as Amazon Web Services that offers a sound service level agreement.

A ceded reinsurance system is an especially good candidate for a SaaS or a hybrid solution (more on that later). It’s an opportunity for insurers and IT professionals to get comfortable with SaaS on a smaller scale before putting a core system such as a policy administration system in the cloud.

SaaS is attractive for several key reasons. One is that it can save money. Instead of paying a large upfront fee for a perpetual software license, the insurer just pays a monthly, all-inclusive “rental” fee. The software vendor and the cloud-hosting vendor provide both the application and underlying software (such as Oracle or WebSphere) and servers. All the insurer needs is a solid Internet connection. And if your building is hit with a flood or earthquake and has to close, business won’t stop, because users can access the system from almost anywhere.

Having the experts run, maintain and upgrade the software is another big advantage. Instead of having internal IT people apply patches and updates, the vendor—which knows its own software better than anyone else—keeps the application going 24/7. Because it is doing the same thing for many customers, there are economies of scale.

Lower upfront costs and the ability to outsource maintenance to experts mean that even small and medium-sized insurers can afford a state-of-the-art system that might be out of reach otherwise. But even big insurers that have the money and funds to buy and staff a system can still find SaaS to be a compelling option. Whether the insurer is big, small or mid-sized, SaaS offers a platform that may never become obsolete.

Additionally, going the SaaS route can get your system up and running faster, as you won’t need to buy hardware and install the system on your servers. How long it will take depends on the amount of customization required and on the data requirements.

Scalability is another plus. When the business grows, the customer can just adjust the monthly fee instead of having to buy more hardware.

A 2014 Gartner survey of organizations in 10 countries said most are deploying SaaS for mission-critical functions. The traditional on-premises software model is expected to shrink from 34% today to 18% by 2017, Gartner said.

While these are powerful advantages, there are some real or at least perceived disadvantages with SaaS. Probably the biggest barrier is willingness to have a third party store data. A ceded system uses nearly all data from the insurance company, sometimes over many underwriting years, and executives must be comfortable that their company’s data is 100% safe when it’s stored elsewhere. That can be a big leap of faith that some companies aren’t ready to make.

A hybrid solution can be a good way around that. More common in Europe, hybrid solutions are starting to catch on in North America. With this model, the software and data reside at the insurer or reinsurer, which also owns the license. The difference is that the vendor connects to the insurer’s environment to monitor, optimize and maintain the system. As with SaaS, the insurer’s IT department has little involvement with continuing operations. All that is work is outsourced.

How much access does the vendor have to the insurer’s data and systems under a hybrid solution? There are various options, depending on the insurer’s comfort level.

What’s the right solution for a ceded reinsurance system to your company? Each company is unique, and the best answer depends on many factors. But whether you go the on-premises route, choose SaaS or use a hybrid solution, you’ll get a modern system that handles reinsurance efficiently and effectively. Your company is going to benefit greatly.

‘Interactive Finance’: Meshing with Google

The insurance industry is poised to enhance its power, burnish its prestige and increase its income in the 21st century by developing interactive finance to mesh with Internet enterprises. By interactive finance, I mean rewarding institutions and individuals with financial or strategic advantage for revealing information that details risk.

Insurance industry success requires recognizing information as this century’s distinct commodity, analogous to steam in the 19th and oil in the 20th. Information also needs to be seen as an indispensable element in fresh, emerging digital currencies.

Information technologies are adequately mature, and mobile and broadband communications networks sufficiently widespread, that digital currencies like Bitcoin are beginning to emerge. Cognitive computing, big data, parallelization, search, capture, curation, storage, sharing, transfer, analysis and visualization are commonplace; three-quarters of American households enjoy broadband access; and nine in 10 Americans carry mobile telephones. User-generated information now is everywhere.

Insurance industry leaders would be wise to cultivate interactive finance. It could be used to manage institutional investments with less risk and more liquidity. Interactive finance could also be used with retail consumers to create experiences, incentives and products to help manage what promises to be massive, new wealth.

A key part of interactive finance — navigating crowds and matching parties — is up and running. For instance, with Airbnb and accommodation or Uber and ride sharing, individuals reveal information voluntarily to enable counter party matching. Both are emerging as phenomenally successful simply by using information in new ways to create efficient markets.

The glimmerings of these potential gold mines are now eliciting insightful commentaries about how insurers might aggregate and parse information gathered through “crowd-sourcing.” Sharing portions of the reward with institutions and individuals through protected communications channels — also known as interactive finance — will provide the broad avenues and fastest expressways to 21st century wealth among insurers.

In two, insightful articles published here on ITL, Denise Garth discerns the key value of information. “Consider the explosion of new data that will be available and valuable in understanding the customers better so as to personalize their experience, provide insights, uncover new needs and identify new products and services that they may be unaware of,” she observes of the strategic alliance betweenFacebook and AXA. “For insurers, the coming years promise unparalleled opportunity to increase their value to their customers. Those that are best able to capitalize on the key technology influencers will reap the most in rewards,” Garth notes in an earlier article on Google.

Indeed, Facebook is poised to offer a money-transfer service in Europe. Pending regulatory approval in Ireland, Facebook would be permitted to employ user deposits in fiat currencies to become a payment services powerhouse with what seems tantalizingly close to a virtual currency. “Authorization from the central bank to become an ‘e-money’ institution would allow Facebook to issue units of stored monetary value that represent a claim against the company,” the Irish Times reported.

The company will use its acquisition of WhatsApp for access and traffic and will build on its 30% participation in revenue with Candy Crush Saga and Farmville games. Facebook will also take advantage of “‘passporting,’ which allows digital payments to be used across EU member states without having to gain regulatory approval from each one,” according to a news report.

Should Facebook succeed, AXA’s partnership with Facebook would put it well ahead of its competition in employing mobile markets to acquire and retain clients.

In an article on ITL on how Amazon could get into insurance, Sathyanarayanan Sethuraman enumerates “the convenience of on-demand buying. . . personalization of product and service delivery.” Crucially, he notes the importance of “building trust through transparency in pricing,” which provides impelling “reasons for insurers and Amazon to create a distribution model to match ever-evolving customer demands.”

Brian Cohen indicates in a thoughtful commentary on ITL that companies can collect customer feedback that is volunteered on social media and can also use new channels to provide new types of information. For instance, he says that, when inclement weather approaches, agents can caution readers to secure objects that may cause damage to their property, as a means toward generating webpage traffic and strengthening client relationships.

Joseph Sebbag cautions that technological mismatches can threaten insurance industry value. “Insurers’ numerous intricate reinsurance contracts and special pool arrangements, countless policies and arrays of transactions create a massive risk of having unintended exposure,” he notes in an intriguing essay evaluating information technology and reinsurance.

Focusing on a company with which I am very familiar, former Comptroller General David Walker says Marketcore has transformative IP in interactive finance that could provide pathways to phenomenal growth for the insurance industry and, in general, finance. The mechanism is incentives for “truth, transparency and transformation” that will make risk vehicles and markets perform more efficiently and reliably. (Walker is honorary chairman of Marketcore; I am an adviser.)

Marketcore generates liquidity by rewarding individuals and institutions for sharing information, such as the history of individual loans being bundled into residential mortgage-backed securities. The reward could be a financial advantage, say a discount on the next interval of a policy for individuals purchasing retail products. The reward could also be a strategic advantage, say foreknowledge of risk exposure for institutions dealing in structured risks like residential mortgage-backed securities or bonds, contracts, insurance policies, lines of credit, loans or securities.

Through interactive finance, Marketcore creates efficient markets for insurers and reinsurers. All do well as each does good. Risk determination permits insureds, brokers and carriers to update risks through “a transparency index. . . based. . . on the quality and quantity of the risk data records.” Component analysis of pooled securities facilitates drilling down in structured risk vehicles so insurers and reinsurers can address complex reinsurance contracts and special pool arrangements with foreknowledge of risk. Real time revaluation of contracts clarifies “the risk factors and valuation of [an] instrument” and, in so doing, “increases liquidity and tracks risks’ associated values even as derivative instruments are created.”

These interactive finance capabilities are at tipping points for insurers and reinsurers, as outlined so thoughtfully by Garth, Sethuraman and Cohen.

As those thought leaders say, large Internet enterprises like Google, Amazon and Facebook are striving for market reach and domination. Because of distributed wire line and wireless networks and the Internet, experts project that global trade will grow to $45 trillion from $6.5 trillion in less than 10 years. Global mobile transactions are projected to show more than 33% average annual growth, with 450 million users in a $720 billion market by 2017.

Only if Amazon, Facebook and Google offer new services can they exert market power in global electronic commerce analogous to late 19th century railroads, energy and steel industries. Each of them needs services like insurance no less than railroads required passengers and freight; than coal and oil required factories, homes, offices and motor vehicles; than steel required cities, railroads, trollies and cars. These Internet enterprises must have insurance, among other services associated with their brands, to remain dominant. All seek to create voluntary, de facto, walled gardens for their brands, and what better way to do so than to get users to rely on their brands to manage risks and pay bills?

None of these Internet search-and-connect giants can recoup its investments in mobile applications, drones and data centers unless it has voluminous, recurrent transactions and traffic engaging its mobile capabilities. For instance, Derek Thompson reports that the iPhone drives 60% of Apple revenue and that mobile advertising accounts for 60% of Facebook advertising revenue. John Greathousespells out the implications for advertising in a thoughtful essay on conversion rates and mobile formats. A service like insurance brings in users and encourages stickiness. In this way, insurance is the correlative to apps, drones and data centers. All these Internet giants are less without it.

Similarly, consumers and institutions are keen to participate in the value that they create with their participation in information technology and communications networks. Citizens and consumers, while resenting unremitting spying, shrug off the constant sale of metrics about their data to advertisers as inescapable and would love to turn tables on all these massive, intrusive public- and private-sector forces. People would willingly patronize a firm rewarding them for revealing risk information that they are comfortable sharing.

By rewarding institutions and individuals with financial or strategic advantage for voluntarily revealing risk-detailing information, interactive finance expressly rewards users for what they forego voluntarily with daily Internet use.

At this stage, the Internet firms have first-mover advantage when it comes to gathering and using people’s information. When I recently watched streaming video of Masterpiece Theatre’s “Mr. Selfridge,” there was the anomalous propinquity of an advertisement for an Internet tire seller in the bottom right portion of my display – within a day or so of my searching Google for motor vehicle tires. Clearly, Google, Internet ad placers and, in my case, the tire vendor are selling and purchasing access to user experiences. The sole party excluded from the value chain is the person who creates value in the information.

Earlier loyalty programs prefigure some of the notions of interactive finance. In mid-20th century America, supermarkets, gasoline stations and retailers often rewarded customer loyalty with S&H Green Stamps. Airlines, grocery chains and hotels employ loyalty programs and provide reward cards to provide incentives for recurrent patronage. In keeping with the times, Bellycard supports customer retention with a scannable card and mobile application. Each time I buy Italian bread and scan the card at the local bakery, I earn points toward a pastry.

What of insurance brokers, who reward consumers with incentives on forthcoming purchases for revealing risk information that they are comfortable sharing? Or insurer carriers, which protect asset values and boost shareholder confidence through enhanced capacities for risk detection and real-time valuation of risk exposures?

From here on out, the emphasis needs to be on rewarding customers and institutions by enabling them to create wealth with the information they are willing to reveal and by commanding information as a commodity and as the cornerstone component of emerging digital currencies. Insurers that can tap Internet industry demands for users, provide rewards for information and equip themselves to manage their risks more effectively can position themselves to dominate their sector well into the second quarter of the 21st century.

“Insurance is above all a relationship,” remarks Elise Manzi, account manager with Biddle & Company Insurance Brokers, based in Newtown Square, Pennsylvania. “We’re devoted to continuing to provide our clients with the exceptional services they have come to expect of us through these new communications capabilities. Interactive finance sounds like a great relationship builder.”

Ernest Tedesco, head of Philadelphia-based Webesco, says, “For brokers, web services support client retention and communication. For large retail carriers like Progressive and Geico, web services enable them to reach consumers directly with service and product offerings. Anything kludgy on one of these sites will send customers scurrying to competitors.” He adds that if Google and other Internet giants get into the retail insurance space, current industry leaders need to be ready to respond aggressively with technology or will be disintermediated. “Back-office executives managing trillions in risk will find themselves at competitive disadvantage without real-time and near-real-time risk detection, which web services visualize.”

By meshing with Internet industry firms on interactive finance terms, the insurance industry will have all the strength of the Internet yet sustain more discretion to manage institutional and customer experiences on terms much more favorable than those that musicians and publishers experience with Apple.

As Erik Brynjolffson and Andrew McAfee point out in The Second Machine Age, digitization both spawns vast new bounty and stimulates an increasingly drastic spread between the small fraction of winners and everyone else.

How better to build crowds and grow volumes than to provide incentives to customers by rewarding them for sharing information they are willing to reveal and to serve institutional clients with foreknowledge of oncoming risks to sustain competitive advantage and protect liquidity.

It is as straightforward as that.

For my part, I am optimistic about Marketcore because its IP enables insurance industry adopters to organize, channel and reward rich, diverse crowds of capital accumulation through interactive finance. Large, incumbent Internet firms like Amazon, Facebook and Google may still prosper from first-mover advantages based, in part, on recognition that information is the distinct commodity of the 21stcentury. But each and all now must offer more to maximize return on investments in capital-intensive operations. And that’s where any insurers, deploying Marketcore IP as sword and shield, stand most to gain for themselves and the people and institutions whose trust they hold.

 

Disjointed Reinsurance Systems: A Recipe for Disaster

Insurers’ numerous intricate reinsurance contracts and special pool arrangements, countless policies and arrays of transactions create a massive risk of having unintended exposure. The inability to ensure that each insured risk has the appropriate reinsurance program associated with it is a recipe for disaster.

Having disjointed systems—a combination of policy administration system (PAS) and spreadsheets, for example—or having systems working in silos are sure ways of having risks fall through the cracks. The question is not if it will happen but when and by how much.

Beyond excessive risk exposure, the risks are many: claims leakage, poor management of aging recoverables and lack of business intelligence capabilities. There’s also the likelihood of not being able to track out-of-compliance reinsurance contracts. For instance, if a reinsurer requires certain exclusion in the policies it reinsures and the direct writer issues the policy without the exclusion, then the policy is out of compliance, and the reinsurer may deny liability.

The result is unreliable financial information for trends, profitability analysis and exposure, to name a few.

Having fragmented solutions and manual processes is the worst formula when it comes to audit trails. This is particularly troubling in an age of stringent standards in an increasingly internationally regulated industry. Integrating the right solution will help reduce risks to an absolute minimum.

Consider vendors offering dedicated and comprehensive systems as opposed to policy administration system vendors, which may simply offer “reinsurance modules” as part of all-encompassing systems. Failing to pick the right solution will cost the insurer frustration and delays by attempting to “right” the solution through a series of customizations. This will surely lead to cost overruns, a lengthy implementation and an uncertain outcome. An incomplete system will need to be customized by adding missing functions.

Common system features a carrier should look out for are:
  • Cession treaties and facultative management
  • Claims and events management
  • Policy management
  • Technical accounting (billing)
  • Bordereaux/statements
  • Internal retrocession
  • Assumed and retrocession operations
  • Financial accounting
  • AP/AR
  • Regulatory reporting
  • Statistical reports
  • Business intelligence
Study before implementing

Picking the right solution is just the start. Implementing a new solution still has many pitfalls. Therefore, the first priority is to perform a thorough and meticulous preliminary study.

The study is directed by the vendor, similar to an audit through a series of meetings and interviews with the different stakeholders: IT, business, etc. It typically lasts one to three weeks depending on the complexity of the project. A good approach is to spend a half-day conducting the scheduled meeting(s) and the other half drafting the findings and submitting them for review the following day.

The study should at least contain the following:

  • A detailed report on the company’s current reinsurance management processes.
  • A determination of potential gaps between the carrier reinsurance processes and the target solution.
  • A list of contracts and financial data required for going live.
  • Specifications for the interfaces.
  • Definitions of the data conversion and migration strategy.
  • Reporting requirements and strategy.
  • Detailed project planning and identification of potential risks.
  • Repository requirements.
  • Assessment and revision of overall project costs.
Preliminary study/(gap analysis) sample:

1. Introduction
  • General introduction and description of project objectives and stakeholders
  • What’s in and out of scope
2. Description of current business setting

3. Business requirements

  • Cession requirements
  • Assumed and retrocession requirements
4. Systems Environment Topics
  • Interfaces/hardware and software requirements
5. Implementation requirements
6. System administration
  • Access, security, backups
7. Risks, pending issues and assumptions
8. Project management plan

The preliminary study report must be submitted to each stakeholder for review and validation as well as endorsement by the head of the steering committee of the insurance company before the start of the project. If necessary, the study should be revised until all parts are adequately defined. Ideally, the report should be used as a road map by the carrier and vendor.

All project risks and issues identified at this stage will be incorporated into the project planning. It saves much time and money to discover them before the implementation phase. One of the main reasons why projects fail is poor communication. Key people on different teams need to actively communicate with each other. There should be at  least one person from each invested area—IT, business and upper management must be part of a well-defined steering committee.

A clear-cut escalation process must be in place to tackle any foreseeable issues and address them in a timely manner.

A Successful Implementation Process
Key areas and related guidelines that are essential to successfully carry out a project.

Data cleansing
Before migration, an in-depth data scrubbing or cleansing is recommended. This is the process of amending or removing data derived from the existing applications that is erroneous, incomplete, inadequately formatted or replicated. The discrepancies discovered or deleted may have been originally produced by user-entry errors or by corruption in transmission or storage.

Data cleansing may also include actions such as harmonization of data, which relates to identifying commonalities in data sets and combining them into a single data component, as well as standardization of data, which is a means of changing a reference data set to a new standard—in other words, use of standard codes.

Data migration

Data migration pertains to the moving of data between the existing system (or systems) and the target application as well as all the measures required for migrating and validating the data throughout the entire cycle. The data needs to be converted so that it’s compatible with the reinsurance system before the migration can take place.

It’s a mapping of all the data with business rules and relevant codes attached to it; this step is required before the automatic migration can take place.

An effective and efficient data migration effort involves anticipating potential issues and threats as well as opportunities, such as determining the most suitable data-migration methodology early in the project and taking appropriate measures to mitigate potential risks. Suitable data migration methodology differs from one carrier to another based on its particular business model.

Analyze and understand the business requirements before gathering and working on the actual data. Thereafter, the carrier must delineate what needs to be migrated and how far back. In the case of long-tail business, such as asbestos coverage, all the historical data must be migrated. This is because it may take several years or decades to identify and assess claims.

Conversely, for short-tail lines, such as property fire or physical auto damage, for which losses are usually known and paid shortly after the loss occurs, only the applicable business data is to be singled out for migration.

A detailed mapping of the existing data and system architecture must be drafted to isolate any issues related to the conversion early on. Most likely, workarounds will be required to overcome the specificities or constraints of the new application. As a result, it will be crucial to establish checks and balances or guidelines to validate the quality and accuracy of the data to be loaded.

Identifying subject-matter experts who are thoroughly acquainted with the source data will lessen the risk of missing undocumented data snags and help ensure the success of the project. Therefore, proper planning for accessibility to qualified resources at both the vendor and insurer is critical. You’ll also need experts in the existing systems, the new application and other tools.

Interfaces

Interfaces in a reinsurance context relate to connecting to the data residing in the upstream system, or PAS, to the reinsurance management system, plus integrating the reinsurance data to other applications, such as the general ledger, the claims system and business intelligence tools.

Integration and interfaces are achieved by exchanging data between two different applications but can include tighter mechanisms such as direct function calls. These are synchronous communications used for information retrieval. The synchronous request is made using a direct function call to the target system.

Again, choosing the right partner will be critical. A provider with extensive experience in developing interfaces between primary insurance systems, general ledgers, BI suites and reinsurance solutions most likely has already developed such interfaces for the most popular packages and will have the know-how and best practices to develop new ones if needed. This will ensure that the process will proceed as smoothly as possible.

After the vendor (primarily) and the carrier carry out all essential implementation specifics to consolidate the process automation and integrations required to deliver the system, look to provide a fully deployable and testable solution ready for user acceptance testing in the reinsurance system test environment.

Formal user training must take place beforehand. It needs to include a role-based program and ought not to be a “one-size-fits-all” training course. Each user group needs to have a specific training program that relates to its particular job functions.

The next step is to prepare for a deployment in production. You’ll need to perform a number of parallel runs of the existing reinsurance solutions and the new reinsurance system and be able to replicate each one and reach the same desired outcome before going live.

Now that you’ve installed a modern, comprehensive reinsurance management system, you’ll have straigh-tthrough automated processing with all the checks and balances in place. You will be able to reap the benefits of a well-thought-out strategy paired with an appropriate reinsurance system that will lead to superior controls, reduced risk and better financials. You’ll no longer have any dangerous hidden “cracks” in your reinsurance program.
This article first appeared in Carrier Management magazine.