With competitive reinsurance rates and abundant capacity, many insurers are choosing to expand their strategic reinsurance purchases to mitigate earnings volatility and better manage their capital. The question is how to make wise strategic decisions.
Executive SummaryInsurers can sharpen their enterprise risk management with strategic reinsurance buying, catastrophe modeling and exposure management, says Alan Kaliski of Hanover Stone Solutions, who details how this can be structured effectively.
The effectiveness of an insurer’s overall risk management program often boils down to how well it structures its reinsurance around its risk appetite, quantified with robust catastrophe modeling and monitored with rigorous exposure management.
Before deciding on the scope of its reinsurance programs, an insurer needs to consider the program’s objectives, or the risks that need to be mitigated, and how much risk it is willing to retain.