StoneRiver, provider of technology and strategic applications for the insurance industry, announced results from its second annual survey of chief financial officers at U.S. property and casualty (P&C) insurance carriers about their experience with reinsurance administration. The goal of the survey was to learn industry trends for 2009 and early 2010, to track interests and to discover strategic direction when it comes to reinsurance administration.
Of the carriers that responded, 53% already use a ceding engine and 47% have a system that automatically identifies and attaches reinsurance per contract terms. However, while some companies have a ceding engine, or automation around the identification and calculation of reinsurance, they still manage reinsurer-level balances, billings, and cash on spreadsheets. In fact, 80% of the respondents rely on spreadsheets for reinsurance administration with only 13% utilizing an automated system. A system that is entirely automated dramatically reduces the likelihood of errors due to manual processes diminishing.
The hottest reinsurance issue cited is the lack of reinsurance automation. This is of interest, considering that every respondent reported that its company has a good sense of the status of reinsurance recoverables. It is possible that the concern comes from not having automation for aggregation in the event of a catastrophe. Another possible explanation could be that the respondents feel comfortable with the status of reinsurance recoverables, but face concern from others within their company about the lack of automation.
“Part of sound reinsurance administration includes consistent processes that produce accurate information,” says Gary Sherne. president, Insurance Solutions, StoneRiver. “Automated systems can help ensure that carriers reach their objectives for dealing with clean data.”
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