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How to Overcome 3 Common Reinsurance Data Processing Errors

May 20, 2016 / Reinsurance

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As a reinsurance pro you know that working with data is an integral part of your role. Many of you are using either a homegrown or professional reinsurance system to process data on a daily basis to maintain and administer reinsured policies. For assumed reinsurance, when a policy gets processed and data is received from the ceding company, the system attempts to perform several actions on it that range from Renewals, Status Changes, Face Changes, Terminations and more.

But what happens when the action isn’t successfully carried out and the policy is not processed? The answer: An error occurs. BUT not to panic. Part of being a reinsurance analyst is dealing with error management. Today I’ll share with you three common errors I encounter when processing specifically within the TAI reinsurance system and how to overcome them. Regardless of what system you use, these may also be helpful to you.

What kind of processing errors do reinsurance analysts come across?

The error management process begins when a policy is not successfully processed during a cycle. This results in an error code that is specific to the problem the system encountered. There are two types of errors:

  • Actionable errors-those that require a user to manually resolve the error
  • Informational errors-those that inform the user that a change has occurred

In the world of TAI reinsurance processing, there are several errors that analysts come across. And some, you might come across more often than others.

THREE TAI reinsurance error codes that I encounter most often:

  • BF: This Error Code occurs when the face does not equal the sum of the retention amount and the ceded amount. It may be caused by a transaction that was missed in the cycle.

It is one of the most important concepts in reinsurance as it is the basis of each reinsured policy. 

  • PDU or Paid Up: This Error Code appears when the policy goes from an active premium paying policy status to a Paid Up status. Paid Up in the most basic sense, is when payments of a certain size are made for a certain number of years, and the policy becomes fully paid up with no additional payments required for the remainder of the coverage time.
  • FC or Face Change: This Error Code is marked on a policy when the face amount of the policy changes, this could be an increase or decrease due to various reasons. Since the Face Value of a policy is one of the most important factors that influence the cost of a life insurance policy, it is crucial for reinsurance analysts to stay on top of these changes and updates to reflect the proper financial impact on reinsurance.

How to overcome these errors?

Right off the bat, I’ll share with you that the system user manual is a useful resource. It has a wealth of knowledge that will help with solving your reinsurance errors if it is available to you. For each of the TAI errors I mentioned above, the user would need to manually go into the specific policy marked for attention and take appropriate actions as outlined within the TAI user manual. One of the most important aspects of processing these errors is paying attention to the details such as:

  • face amounts,
  • mortality,
  • smoker class,
  • age,
  • etc.

… As changes in these could be one of the many causes for errors identified by the TAI processing system.

If any processing errors are not resolved promptly and correctly, they will compound and become more complex. This would require additional time and expertise to correct. Most importantly, any premium payments that should have been made in the current billing period would be deferred until the marked policies are manually resolved and billed to date.

As a professional third party reinsurance administrator, it is crucial that we provide accuracy in our processing for our clients. We measure and track our error management issues so that our clients have confidence in our services. It’s in our practice to solve error issues right away when we encounter them so that it becomes a manageable process and we encourage you to do the same to prevent the increase in number or errors in the next reporting period.

Feeling better about managing BF, PDU and FC errors? Great! You are becoming a stronger analyst already. What other errors have you encountered while processing policies on your life reinsurance system? Let me know in the comments below!

P.S Looking for ways to optimize your reinsurance administration processes? We can help! Talk to our experts about our reinsurance services.

Written by
Aminaz Mitha