(Hurricane Isabel, Sept. 2003. Source: NASA.)
Like any other business, reinsurance boils down to reputation management. Every insurance company wants to work with reliable and trustworthy reinsurers that have a reputation for meeting or exceeding expectations. But any reinsurance professional can tell you that reinsurers today are challenged by increasingly fierce competition, including from new market players with substantial investments from alternative capital that helps them leverage their data technology prowess to impress and lure customers away from established reinsurance firms. This new competition places a bright spotlight on the fact that insurers want to work with reinsurance companies that are nimble, responsive, and easy to work with.
Unfortunately, IT is the space where many established reinsurers often fall short. One example: customers have been trying to get their ceded reinsurance systems to “talk” to their reinsurer’s systems for years. Ideally, an insurance company would rely on real-time reinsurance statistics to better understand its overall risk exposures, including how those risks are reinsured. As claims are made, this transparency would expedite invoicing from the insurer to its reinsurance companies, which, with access to the same information, would easily be able to process requests for information and make timely payments.
But this productive workflow hasn’t been realized yet. Why not? Primarily because reinsurers tend to use disparate, componentized, and/or internally-devised technology systems across their business functions. As a result, exchanging data with them is problematic, at best.
Reinsurers are not entirely to blame for this. After all, there just aren’t that many reinsurance firms – only about 50 in the U.S. Consequently, few software companies have developed viable modern core IT systems to handle every aspect of the reinsurance business from a single platform. The ones who have attempted in the past use technology platforms and coding languages that are now considered outdated.
Today, however, core IT systems that are purpose-built for the needs of reinsurers are finally available. Built on a single, common data model, these systems allow reinsurers to access their underlying data across departments and run any type of functionality on a set of personalized screens. These systems offer the flexibility and scalability needed to quickly respond to rapidly changing business conditions and market demands.
Why consider investing in a core reinsurance system? I’ll answer with a few questions for you:
- Would your customers respond positively to faster response times to their requests for more information when claims are made?
- Would timely bill payments for claims help establish your credibility as a professional reinsurer?
- Would you appreciate the ability to interface easily with the IT systems at your primary insurers?
- Does your current billing system automatically and seamlessly support multiple currencies and legal entities to ensure that operations can support all sources of financial data processed by your business?
- Does your current IT system have the ability to fully and automatically analyze your risk exposures across books of business, even as claims are processed and exposures change?
- Does your current IT system automatically attach assumed contracts to ceded policies to create real-time premium cessions and deliver a comprehensive proportional reinsurance management capability?
- Did you know that these new reinsurance core systems have the flexibility to seamlessly integrate proprietary, home-grown IT applications for functions such as pricing and document management?
- Would you like to save time when processing data and information and preparing documents to meet statutory Schedule F regulatory requirements?
- Would you enjoy more renewed contracts because insurers know you are easy to work with and responsive?
To summarize the case for modern core IT systems: reinsurers who seize the opportunity to invest in one of the new core IT systems designed for reinsurance will become more nimble in their operations, more flexible at responding to customer and market needs, bettered aligned in their client communications, and they will reduce long-term operating costs significantly. Implementing an integrated, single data model core IT system will help professional reinsurance companies compete, manage their reputations, maintain existing business and win new customers.