The digital revolution has reshaped countless industries, so why is reinsurance seriously lagging behind? Especially when the ability to harness and effectively manage data is becoming the critical determinant of success in our unique marketplace. By Ben Rose, president of Supercede.
Recent reports highlight pressing concerns surrounding inconsistent, inaccurate, and ambiguous data shared between cedents, brokers, and reinsurers.
Diving deeper we begin to see a compelling narrative emerge for clarity, transparency, and innovation in the reinsurance data landscape.
The cost for opaque information, as we’ll discover, is steep.
The trust deficit and its price
Transparent and accurate data submissions lie at the heart of trust. For underwriters and actuaries, information integrity is invaluable; gaps or inconsistencies in data rapidly erodes this trust.
The consequences? Reinsurers frequently impose 5%-10% pricing loads during renewals due to uncertainty stemming from poor data quality, in an industry with tight margins this could be the difference between insurers making a profit or a loss.
These costs are absorbed by cedents, increasing their reinsurance expenditures – sometimes drastically. In addition to the financial cost, underwriters may also withhold capacity when presented with questionable submissions.
As all working within reinsurance know, the narrative accompanying the data plays an important role. Discrepancies between claims and actual figures or inconsistencies in the story presented can create scepticism.
Janitorial work or cleaning the data is then placed on brokers to ensure narratives are reflective of the facts – a job that takes away focus from their primary value-add of ensuring, and getting approval for, optimal deal structure at the best rate.
The landscape is shifting
Understaffed reinsurer underwriting teams often find themselves grappling with data quality issues, leading to a waste of valuable time and resources. Naturally, these teams prioritise clients who offer clean, usable data, creating a competitive edge for those who maintain data integrity.
This situation underlines the need for a significant cultural shift. While technology can provide tools and platforms, a change in mindset and approach is equally crucial.
Modern reinsurance professionals, many of whom are digital natives, are increasingly frustrated by the reliance on outdated systems.
This not only stifles efficiency but threatens to drive away a new generation of tech-savvy talent, forced to use legacy systems that are older than they are. Embracing digital innovation is no longer a mere option, it’s an imperative for both operational success and talent retention.
Reinsurtech to the rescue
Reinsurance technology offers a beacon of hope. Cloud-based software solutions are emerging as a game-changer to our change-needing sector.
These tools not only reduce manual processes but also elevate overall efficiency by orders of magnitude. By focusing on adept data preparation, they minimise errors, streamline operations, and pave the way for sophisticated data analyses.
Such platforms can serve as catalysts for much-needed digital transformation.
The potential of technology can only be fully realised when combined with a renewed commitment to transparency and discipline in data management. Cedents must prioritise sharing accurate information with partners, while reinsurers and brokers need to articulate their expectations clearly.
Steering towards a brighter future
The call to action is unequivocal; the reinsurance industry must champion data accuracy, transparency, and modernisation.
As the industry stands at this critical juncture, the blend of robust data practices and cutting-edge technology can redefine its future landscape.
Now is the moment for collective action, and substantial rewards await those dedicated to revolutionising information exchange in reinsurance. For those seeking a deeper understanding of these insights, a comprehensive whitepaper detailing expert industry opinions and actionable recommendations is available here.