Reinsurance - Help!
2005-Dec-01 - W. Michael Reese
In my previous job, I spent 15 years handling the individual life and health reinsurance for a fairly large Midwest life and health company. During that time, consolidation in the reinsurance industry was a constant and visible occurrence. Names like Mercantile & General, American United Life, Lincoln National, Allianz, CNA and Security Life of Denver will still be seen on the front page of in-force treaties, but they will probably never re-enter the active life reinsurance arena again. When you think about it, it's really just a small subset of mergers and acquisitions, or a piece of the active movement of companies to focus on what they consider their core business strengths. Let's all hope that the consolidation years are over, and that start up companies like Scottish Re and Wilton Re are the wave of the future.
What's on the mind of direct company reinsurance managers today? I'm sure they are thinking about the next round of negotiations, hoping they can convince the reinsurance actuaries to give them the lowest possible YRT rates (or the highest possible coinsurance allowances!).
The days of "gentleman's agreements" in the reinsurance arena are long over. The gentleman that signed the treaty may no longer be available, and the company itself may be a victim of consolidation. It is well-advised that reinsurance managers and corporate attorneys are spending extra time reviewing and negotiating wording. Some help is already available for direct companies in the form of the ACLI's reinsurance treaty blank. More direct companies have developed their own treaties, which allows for more consistency in the future administration and disposition of your reinsured business.
It is still true that reinsurance is a partnership between direct writer and reinsurer. There is no denying that the strong relationships that develop and lead to a good partnership will remain the preferred mode of doing business.
If you have not paid close attention to your reinsurance program costs lately, you may be surprised. I would be happy to put my knowledge to work for you by performing a review of your programs, and offering suggestions to make sure your reinsurance is set up and operating as effectively as possible.