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Aon Inpoint Reveals Results of Reinsurance Survey

Source: Inpoint

Posted on 22 Jun 2010

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Reinsurance, which plays a major role in the insurance industry, assists companies in maintaining a manageable and profitable portfolio of insured risks. With reinsurance recoverables for the property and casualty industry hovering at $744 billion at year end 2008, reinsurance is clearly one of the largest assets of insurance companies.

In 2009, Inpoint Services, an Aon company providing insurance and reinsurance companies with consulting expertise and service solutions, sponsored an independent, insurance industry-wide survey of ceded reinsurance operations. The goal was to identify changes from the 2005 findings survey and to gain a greater understanding of the current operational landscape in ceded reinsurance processing.

Inpoint Services’ research partner, the Leede Group, interviewed 138 insurance executives and managers with ceded reinsurance responsibilities. The survey, conducted in the first quarter of 2009, consisted of 37 questions related to the people, processes, and technology in place for ceded reinsurance administration.

Companies surveyed are largely mutual and stock insurers located in the United States, Puerto Rico, Canada, and Bermuda. They range in size from $1 million to $12 billion in ceded reinsurance premiums (as of 12/31/07), and $3 million to $63 billion in policyholder surplus (as of 12/31/07).

To promote relevant comparisons, findings were segmented into the following three company tiers for both ceded premium and policyholder surplus:

• Tier 1 (less than $100 million)

• Tier 2 (between $100 million and $500 million)

• Tier 3 (greater than $500 million)

This survey found that most respondents believe reinsurance results are critical to a company’s overall success. Over three-quarters of respondents stated that their reinsurance financial results meet or exceed their expectations.

Of the companies surveyed, 49 percent responded that the complexity of their reinsurance is increasing, and in response they are changing the way they manage their reinsurance. To adapt, larger companies indicate they may make personnel changes and institute reorganization, while smaller companies may implement technology and increase automation.

More than half of insurers say they receive reinsurance payments within 30 days and nearly all report that they receive their payments within 60 days.

The Inpoint ceded reinsurance operations survey found that of 138 insurers, 55% collect on excess-of-loss reinsurance claims within 30 days, and 33% collect within 60 days. Only 4% of insurers said it takes more than 60 days to collect.