Insurers’ numerous intricate reinsurance contracts and special pool arrangements, countless policies, and arrays of transactions create a massive risk of having unintended exposure. Inability to ensure that each insured risk has the appropriate reinsurance program associated with it is a recipe for disaster.
Executive SummaryEffisoft's Joseph Sebbag explains some of the initial carrier considerations for selecting a reinsurance management system, components of a preliminary implementation study and key steps in the integration process to ensure a smooth handoff of information between the PAS and reinsurance management systems.
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.
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