The ORM process - Reinsurance Software Solution

Reinsurance, also known as insurance for insurers, is the practice of transferring portions of risk portfolios to third parties, i.e. reinsurance companies directly or through a broker as means of risk management.

1. Actuarial predictions of the future Claim and Policy flow

Currently, the insurance companies have limited tools which can give them insights about the future number of claims and future value of the claims, as well as future scenarios with certain probabilities.
The Optimal Reinsurance Management (ORM) is a reinsurance software solution which graphically shows all possible future scenarios, claims, and values of claims, and based on them suggests which type of reinsurance treaty would be best for the insurance company.

2. Optimal packaging of the risks and clustering the treaties needed to provide the best financial results

Choosing the right combination of reinsurance treaty from a variety of treaties and multiple reinsurance companies can be a difficult task. It involves building probabilistic models that compare the different outcome for all the combinations of all possible treaties. The best treaty combination for the insurance company is the one which ensures highest profit at high probability of surviving. Based on the strategy of the insurance company, the optimal reinsurance treaty can be one with the highest protection for a certain amount of ceded premium, or with lowest amount of premium ceded to a certain level of reinsurance protection.

3. Reinsurance management

Having a reinsurance treaty brings many responsibilities. Maintaining the overview for all the policies and claims how they are connected to the active reinsurance treaties is a demanding job. We have built a reinsurance software solution that automatically recognizes what portion of a certain policy should be ceded to the respective treaty and a tool that knows when to trigger some nonproportional treaties. The same principles are applied for the claims. The bordereaux reports are generated when needed and can be done for a flexible period time.

Profitability Analysis

The ORM model breaks down the stats by insurance types and offers insights into the profitability of each portfolio segment which can give different aspects of marketing different portfolio segments, and it can classify optimal reinsurance treaties by Class/Policy type and/or joint ones.

Bring knowledge to your negotiation table

The insurance companies do not have the upper hand when it comes to getting the exact type of treaty they look for. The insurers have to pick from the treaties that are provided to them as an option from the reinsurers not vice versa. The ORM software can provide a comparison between several different treaties to make it easier for the insurance companies to choose the best treaty based on the input parameters for maximum profit within percentage of survival. Having our reinsurance software solution is of great help, as it turns the table in the negotiations and the Reinsurer will need to reply to the preference ORM has created accordingly.