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How EY can help
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We help insurers meet new regulatory and compliance accounting standards while managing costs, operational efficiencies, and the integration and implementation of systems and data across the finance, risk and actuarial functions.
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The need and the opportunity
As the use of reinsurance has grown, traditional approaches to the operating model for reinsurance have often become a challenge. Insurers are seeking more agile, data-driven and automated solutions to provide real-time insights, improved decision support and well-controlled, efficient financial and administrative operations. Some of the operational considerations for the increased use of reinsurance include:
- Onboarding new treaties – the deal team and the operations team must define a coordinated and efficient playbook to onboard new treaties for internal and third-party reinsurers.
- Data and systems impact – new processes and data pipelines to support financial reporting, operations, actuarial, investments, risk and management reporting must be designed and implemented with proper compliance and internal controls.
- Close calendar timelines – increased complexity of reinsurance administration and settlement processes can add significant time and risk to financial close calendars if a coordinated implementation effort is not undertaken across finance, actuarial, tax and risk functions.
- Talent, roles and responsibilities – reinsurance strategy and operations can be complex, so finding specialized talent can be time-consuming. New roles and responsibilities must be well-defined.
- Management insights – lack of granularity in data and a broader lack of adequate projection capabilities and historical information on a comparable basis often constrain the level of analysis needed for timely decision-making. Factoring in the time required to explain results is critical.
- Strategic business management – a concerted effort to actively manage the portfolio of reinsurance arrangements must be undertaken, and this requires more timely and granular decision support information, typically spanning multiple functions to support these insights.
Reinsurance is an important component of the business model. Addressing these types of challenges, which have often not been prioritized in related transformation programs will be critical to success. A holistic review of the operating model that supports reinsurance is critical to consider in leading practices.