Tips and practical advice for maintaining a good relationship between the insurer and reinsurer

​Partnership and open communication are the keys to maintaining a good relationship between the insurer and reinsurer. Like any strong relationship, this partnership is best when built on communication, transparency, open-mindedness and sharing in mutually beneficial efficiencies.

• The reinsurer is available and willing to provide consultation and expertise in complex claim situations.

Reinsurers see a wide variety of scenarios from a large volume of companies. They can review a complex claim and offer a perspective based on their knowledge and experience.  This generally occurs with questions around claim adjudication or during contestable claim review.  Reinsurers can also provide support to insurers who want to modify or streamline claims adjudication processes.  In addition, when a ceding company is looking for resources, reinsurers can offer recommendations for third party vendors to assist with investigations.

• Reinsurers are familiar with the treaty agreement that governs the relationship and defines the risks each party is taking.

It is recommended to involve the reinsurer as early as possible in complex claim decisions on a reinsured policy. By consulting with the reinsurer early on unusual or complex claims, the reinsurer can be made aware of the situation and work together with the insurer. This promotes transparency between both parties and reduces the likelihood of subsequent misunderstandings related to reinsurance coverage.

• Most treaties contain Errors & Omissions (E&O) provisions.

The E&O provision within the treaty defines handling of an unintentional error, oversight, omission, or misunderstanding in the administration of the reinsurance agreement between the cedent and reinsurer.  This provision is meant to allow both parties to resolve the situation in a manner that is fair and reasonable and most closely approximates the intent of the Parties as evidenced by the Agreement.  Communication is important in this process, and letting the reinsurer know as soon as an error is realized allows both the reinsurer and ceding company to reach an agreeable solution and prevent the error from becoming a systemic issue.

• Communication regarding system updates is also crucial in this partnership.

Letting the reinsurer know early in the implementation of a system change or upgrade that will impact how information or data is communicated to the reinsurer allows the reinsurer to prepare for the incoming data changes. The reinsurer may have  suggestions based on similar experiences that would allow them to provide insight into how best to handle these changes. There may also be requirements in the data, as provided in the treaty, that would need to be considered with the system upgrade. The reinsurer can communicate and work with the insurer to successfully complete the system changes impacting reinsurance reporting.

• Are you seeing new trends in the industry and are not sure if they are standard and acceptable?
  

Check with your reinsurer. It is possible they have seen something similar from another insurer and can provide suggestions on how best to react to that trend or provide insight into how other insurers have reacted. With the recent advancements in Artificial Intelligence and the ever-changing regulatory landscape, reinsurers have a good pulse on industry trends that may prove valuable to insurers.

• Reinsurers are available to talk through potential process changes.
  

Perhaps your company is wishing to reduce the amount of paperwork that must be provided to the reinsurer. Consider collaborating with the reinsurer to establish a Document Reduction Program at thresholds that are agreeable to both parties. Requiring fewer documents reduces the effort to provide and review them for both parties, as well as the amount of Personally Identifiable Information (PII) being transmitted and stored, which results in more data security. Another possible option is for the reinsurer to provide suggestions for implementing an express pay agreement. This allows for quicker payment of claims to the beneficiary, resulting in lower interest liability and an enhanced customer experience. These are just some of the topics that can provide mutually beneficial efficiencies for both the insurer and reinsurer.

• The relationship between reinsurers and insurers is important and can be fostered by networking at industry events such as the ICA Conference.

The reinsurers look forward to seeing their partners in person and discussing issues and questions in a face-to-face setting. Capitalize on the opportunity to sit down over dinner or a cocktail at one of the many industry events and get to know your reinsurance partners to continue to build that communication and partnership.

In the complex world of insurance, the partnership between insurer and reinsurer is crucial. It can lead to better risk management, shared efficiencies in processes and mutual growth.

 Author(s)
Jennifer Kusner, Manager, Claims, Hannover Re