Tim Spencer, Duck Creek Reinsurance Management powered by XL, London Markets, UK, and Ireland, looks at the regional challenges that face insurers looking to reinsure some of their risk
The majority of insurers have come to rely on reinsurance as a tool to help grow their businesses, contribute to their overall capacity and protect their balance sheets against unforeseen events. For that reason, the administration of this process is essential to leverage the benefits of reinsurance and ensure confidence in the business’s solvency.
Yet the systems that drive the reinsurance workflows and enable consistent, high-quality outcomes are often proving themselves to be antiquated and in need of investment and modernisation. Eliminating complexity through the intelligent use of the right technologies is crucial – executing this effectively in today’s fast-moving market environment is not always straightforward, however, and demands the use of reinsurance management software to ensure greater accuracy.
Duck Creek Reinsurance Management powered by XL targets the reinsurance administration, calculation, and accounting procedures and has considerable experience in the variations and nuances of the London insurance market and those elsewhere in EMEA, whether it be the outwards reinsurance process, the inwards or assumed one or retrocessional activities ‘ceding’ to further reinsurance companies.
Addressing process inefficiencies
Regardless of the type of software being used, the main indicators that reinsurance operations are struggling with inefficiencies are reactions of customers and partners involved in the reinsurance chain, audit issues, regulatory concerns and a dearth of in-house expertise.
Many insurers are still manually processing reinsurance administration and accounting while calculating books of business individually as they go along. There can be little or no centralisation, standardisation and reinsurance activities are spread over multiple spreadsheets, possibly using old reinsurance systems – it’s not too hard to see that business advantage and benefit can be seen in the immediate efficiencies and freeing up valuable people resource resulting from automation of manual processes.
There are also further business case benefits beyond pure automation efficiencies in implementing a new system and process, and these include faster financial closings, contract certainty (previously a big issue in the London market), earlier claims recoveries and speedier identification of claims leakage.
Also often overlooked are the reputational aspects that could present themselves to insurers, whereby administration processes can take a long time and may contain inaccuracies resulting in reinsurers being reluctant to continue to offer capacity.
Modern reinsurance management systems
Duck Creek Reinsurance Management powered by XL currently has 60 customers globally, including three in the London market, a number in the United States and Bermuda as well as some in the life reinsurance market. Our modern reinsurance management system has been specifically designed to help reinsurance teams resolve many of the challenges they face while being flexible enough to evolve with the business over time. We’ve helped many insurers and reinsurers improve and modernise their reinsurance system operations.
Read more on Duck Creek Reinsurance Management – powered by XL – for centralising, streamlining and automating all your reinsurance processes.