A cedant's best friend
Robert Kesselring, chairman of reinsurance asset collection firm Helix UK, explains what help is available to enable insurers to navigate the market.
London is the world’s oldest insurance market and, steeped in tradition as it is, the city has established a level of complexity that can make it difficult to navigate. It is an institution fundamentally built upon complex and historic personal relationships: something cedants must understand in order to operate effectively within it.
This is how Robert Kesselring, the chairman of Helix UK, a firm that helps cedants with their reinsurance recoveries, describes the market and the challenges cedants can face when dealing with it. “It is essential to build relationships,” he says. “Doing business in London requires interpersonal contact.”
And, he says, this can be especially true when it comes to collecting reinsurance assets. Because London is a subscription market, in most cases the reinsurer requires the lead underwriter (claims adjuster) to agree a collection request (claim). “If the lead does not agree the claim, or questions it, the claim will also not be agreed by the following market,” says Kesselring.
It is essential, he notes, for cedants to supply plenty of detail when submitting reinsurance claims. The London Market has some of the most experienced adjusters in the world so if a request is inaccurate or information is missing, cedants are likely to encounter problems.
“If there is the remotest possibility that a cedant’s request is invalid then London adjusters will usually pick up on that. They will as a consequence either kick the request out or raise a long list of queries,” says Kesselring. “To do this the London Market engages highly skilled adjusters who analyse coverage, placement and contractual details to the nth degree,” he explains.
But while the London Market may still set great store on personal relationships, the days of reinsurers paying out based purely on these ‘gentlemen’s agreements’ are gone.
“The old rule of ‘good faith’ does not apply in terms of agreement of reinsurance claims, compared with the situation in years gone past. Nowadays a cedant has to support its presentation with far more substance than was required historically,” he says.
Lack of understanding
Kesselring believes that these problems can be compounded by the fact that many cedants outside the London Market do not truly understand how the market works. On top of this, the fact that it is a broker-led market can exacerbate the problem.
