Seven Habits of Highly Effective Reinsurance Divisions

By Nicole Karfakis | September 29, 2021

For many life insurance companies, reinsurance divisions can experience inefficiencies due to  

  • Outdated operational systems, manuals, and processes
  • Manual administration
  • Inconsistent operational workflows
  • Limited time to implement process improvements 

This can translate to day-to-day tasks being more time-consuming than necessary and exposing organizations to costly errors.

How can your reinsurance administration team make incremental changes to address inefficiencies? Consider the list of seven habits of highly effective reinsurance divisions that TAI's business process optimization team compiled based on our collective experience helping life insurers achieve targeted reinsurance operating models.

1/ Review processes regularly

It's no secret that reinsurance administration relies on many processes. However, once established, does your team take the time to revisit and review them? Reviewing processes regularly can help remove inefficiencies, redundancy, and irrelevant tasks. Spreadsheets are often a marker of processes that need review. Management by spreadsheet is time-consuming and error-prone. Eliminating them goes a long way toward increasing efficiencies. 

We've worked with clients who have had hundreds of spreadsheets, and we could help them whittle the number down by asking a few questions, such as the following:

Can the spreadsheet be replaced with new functionality? The best time to review spreadsheets and processes, in general, is when new releases are introduced. TAI software upgrades almost always offer an opportunity to make existing processes more efficient.

Is the data still being used? Many spreadsheets are holdovers from requests made months, years, or even decades ago. For example, a manager who left the organization in 2005 wanted monthly data in a spreadsheet. Even though it's still being created every month, no one has used it for years.

Can the spreadsheets be consolidated? It's easy to wind up with similar spreadsheets created by different business groups. You may be able to consolidate these into one spreadsheet, using pivot tables to make the data easily digestible.

2/ Create operational process manuals

Creating operational process manuals and guides contributes to consistency across the organization. If the process is complex or rarely used, you'll want to produce documentation that even experienced employees can refer to as needed. For more common processes, documenting them and making them an integral part of your onboarding process can help bring employees up to speed faster and eliminate errors. 

For example, you might have a specific process you want your team to follow to perform tasks such as adjustments for NAR, ceded amounts, or treaty-related items within TAI. How to do these things is included in TAI's system documentation, of course, but the additional best practices and company guidelines you define are important. Thoroughly documenting how these processes are to be performed in your organization reduces training time and errors. 

3/ Document business decisions

Documentation is essential to maintaining key control evidence for compliance purposes and eliminating misunderstandings. This documentation helps ensure you have evidence of the completion of the review, an explanation of the review and actions to be taken, and managerial/peer approval as required.

US Life Insurer consolidates and simplifies reinsurance administration processes with TAI

4/ Cross-train employees

One of the greatest risks any organization can take is having only one person on staff who knows how to perform a critical function. This is often referred to as a "single point of failure." If that person is unavailable – even temporarily – it can bring business to a standstill.

Cross-training employees to serve as backups for key positions is an effective way to eliminate these single points of failure. The documentation of processes and business decisions mentioned above can also make it easier for these individuals to step into these critical roles should it become necessary. 

Remember, a single point of failure may be time dependent. For example, you might have monthly, quarterly, or yearly reports that need to be completed for compliance purposes. You'll want to ensure these processes also have backup personnel ready to go if needed.

5/ Take advantage of exception reporting

Many of the habits we've discussed so far don't necessarily require TAI software, although they were written with it in mind. That said, exception reporting is an efficiency feature of TAI software that should be leveraged. 

Exception reports identify abnormal data changes that need to be examined before you send reports to your reinsurers. For example, if the face value of a policy changes, the exception report flags this so that someone can manually check the data. TAI's exception reports also help ensure that internal and external financial reports are accurate as well.

6/ Develop integrations

Speaking of financial data, TAI is not an accounting system, but the accounting system often uses the output it creates. Since computers were first used to digitize bookkeeping, financial professionals have sought ways to avoid doubling up on data entry. Your reinsurance team can help by working with finance to either create an automatic integration or format the output from TAI so that it can be imported into the accounting system with just a click or two.

Developing integrations also applies to other functions, such as underwriting, which use the information that TAI generates. The more efficiently these connections can be automated, the less work either team needs to do to keep data current and accurate. If you need assistance, TAI's implementation experts can help you spot opportunities for tighter integrations and develop appropriate solutions. 

7/ Leverage additional TAI modules

Identify opportunities to streamline parts of your reinsurance operations through additional TAI modules, including the following:

  • Claims – Often we see reinsurers managing and reporting claims outside of the TAI system. The Claims module allows clients to automatically feed claims into TAI to process the reinsurance billing and collectibles, ultimately establishing one source of data.
  • Valuation Cycle – This module computes reinsurance reserves, creates a reserve extract, and produces reserve reports. By using this module, users can load reserves into TAI to simplify reporting.

Achieve your target operating model with TAI

We understand that reviewing internal operations to identify gaps and implementing new processes to streamline inefficiencies requires time and resources that may not be available. TAI is here to help. We're equipped with the processes, tools, and resources to eliminate inefficiencies, maximize the use of your TAI software, and streamline data flows among internal departments. Contact us for help optimizing your operations.

Learn how we helped a US life insurer consolidate and simplify reinsurance administration processes by applying industry best. practices: view case study.