Less than half of US reinsurers have a reinsurer unit
Just 44 percent of US insurers have their reinsurance administered by a dedicated department, according to a survey conducted on behalf of Inpoint Services.
Most insurers distribute responsibility for reinsurance administration across several departments. Company size and available resources have a lot to do with this decision, researchers for the Aon company found.
The survey of 138 insurers found that only 21 percent of companies with ceded premiums of less than $100 million have a dedicated reinsurance department. Conversely, 68 percent of medium-sized companies with ceded premiums of between $100 million and $500 million and 87 percent of large companies with ceded premiums of more than $500 million have their own dedicated reinsurance departments.
“The decision to centralise reinsurance functions depends on a host of factors, including availability of staff, the processes used, technology and the complexity of the reinsurance programme itself,” said Tim Corley, senior solutions specialist at Inpoint Services. “Insurers need to determine the point at which centralising the reinsurance function makes sense.”
The survey determined that companies that do not have dedicated reinsurance departments draw on expertise from other departments. Underwriting, with a mean of 6.5 employees, is the department that has the most people performing some level of reinsurance administration, when all companies—small, medium and large—are counted together. Accounting and claims provide 6.3 and 6.1 employees, respectively. Management provides only 2.9 employees, while IT provides only 2.6.
“In most cases, these personnel performing reinsurance functions received their training on the job,” Corley said. “This could lead to problems as baby boomers retire and the knowledge base walks out the door. Succession planning, documentation of processes, standardisation of training or outsourcing administration to an external service provider can help mitigate the risks associated with the loss of key employees.”
Inpoint Services’ survey of managers and executives at 138 insurance companies in the US, Canada and Bermuda was conducted by the Leede Group.
