As an insurance company, you would be aware of the financial risks involved in issuing claims. However, what if you could reduce the risks and capital losses associated with them?
That is made possible by reinsurance, a process in which you buy insurance from another company to spread the risks, reduce the amount of capital required to cover the losses, increase your coverage capacity, and recover all or partial amounts paid in claims.
In other words, it acts as insurance for the insurer.
Two parties are involved in these agreements: the primary insurer and the reinsurer, to whom the transfer policies are ceded. But how do you find the right reinsurance partner while considering important factors such as price, risk-taking ability, services etc.?
The best way to find the right reinsurer is through a creative insurance management consulting firm that specializes in reinsurance placement through a creative approach while offering a variety of services related to the process.
What services are offered by such firms, and which approach do they take? Read on to find out.
Consultant firm’s approach to reinsurance placement
An experienced consulting firm makes it easier for you to find an insurance partner, as they focus on creative reinsurance placement through actuarial and technical analysis methods.
Their actuarial expertise makes it possible for them to price risk effectively to ensure that reinsurers offer terms corresponding to the risk involved in an agreement.
A brokerage firm usually evaluates insurers and reinsurers on five points: coverage, price, service, stability and security. They consider your company’s culture and risk-taking appetite for the services provided.
Long-term relationships and the overall stability of operations influence a reinsurance strategy and play an essential role in the structure and placement of risk transfer solutions.
Before choosing a brokerage firm to help you find the right reinsurer, you should check if they can procure favorable terms for you and ensure transfer risk at a rate which produces reasonable profits in the long run.
What are the types of services provided?
Hiring a consulting firm gives you access to a wide array of services. They usually cover all the aspects of finding a suitable reinsurer, including negotiations, preparation and signing of contracts, premium payment, reinsurance claims, and periodic exchange of information.
Developing optimal reinsurance structure
You can depend on their expertise to review and develop the best reinsurance structure that meets your long-term strategy, uniquely and creatively. Their insurance brokerage team will offer technical expertise to help you choose between the various reinsurers and their price structures.
Target risk level
They develop target risk levels and provide market expertise to help you get the coverage you require, depending on your requirements. Without their help, you would have to deal with the various risks yourself, for example, finding the right reinsurer at a reasonable cost.
Preparing annual submission
As part of their services, a consulting firm prepares an annual reinsurance submission that meets your yearly policy’s objectives and requirements.
Monitoring a reinsurer’s financial viability
Before choosing a reinsurer, you must evaluate their credit risk and ability to cover reinsured claims. Partners with a weak credit risk will become a financial liability, leading to a loss of capital on your part. A consultant will help monitor and assess the reinsurers for their financial viability and ability to absorb some, if not the entire portion of the risks.
Best customer service
A good consulting firm provides the highest quality customer service, responding immediately to your queries at any point during the reinsurer finding journey (or contact points) and providing access to helpful resources whenever required. You should hire the services of an insurance management consulting firm to help you find the right reinsurance partner. They do that through their creative placement approach focusing on technical analysis and a wide range of services.