Insurance technology investments too often bypass reinsurance departments, leaving them technologically challenged, hurting financial results and even putting surplus at risk. Celent estimates that new strategies and solutions can help ceding insurers increase their recoveries by 2%-4%, or US$420-840 million industry-wide per year.
Reinsurance is a very old part of the insurance industry. Many reinsurance practices were established in an different world where gentlemen at reinsurers and cedent companies dealt with each other in the utmost good faith; and transactions were conducted using the spoken word, paper, and handshakes.
In a new report, Property/Casualty Reinsurance Cedent Technology Strategies, Celent reviews recent developments in the global reinsurance market, describes where and how in the reinsurance cycle insurance company cedents are feeling pain, and discusses available technology solutions. It gives a closer look at three reinsurance processes: issue and contract administration, claims and recoverables, and reporting, analysis and program design.
According to Donald Light, author of the report and Senior Analyst in Celent�s insurance group, “Cedents can gain a significant financial benefit from available technology. If all ceding insurance companies comprehensively implemented technology and process changes, they could increase their recoveries from reinsurance by 2% to 4% or US$420 million to US$840 million.”
Light adds, “A good starting point for a cedent, looking at initiatives and supporting technology, is to assess their current level of process pain and the potential financial return from the various kinds of technology.”
Celent classifies five kinds of technologies available to insurance company cedents: Integrated Reinsurance Solutions (which are provide functionality across all reinsurance functions), Policy Administration Systems (which include more limited cedent functionality), Point Solutions and Business Process Outsourcing (addressing narrower areas such as business intelligence), Components (such as business rules engines), and Standards (including ACORD Reinsurance).
The report examines each of these areas, and presents a case study of Nationwide Insurance�s Reinsurance Operation. It concludes with specific recommendations for insurers and technology vendors.
The 24 page report has 6 figures and tables.
A Table of Contents is available online.
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Celent’s service offering falls into two categories, consulting and research, each of which is dedicated to technology in the financial services industry. We help banks, brokerage firms and insurance companies use IT to enter new markets in the shortest possible timeframes. All of our services are geared towards facilitating better informed, faster decision making. For more information visit www.celent.com.