How do we do it

Our Reinsurance Software

Input parameters

For the future probabilistic models to be built, several input parameters should be considered:

1. Table of a maximum coverage

Based on the total company assets and the governmental regulations actuaries build table of maximum coverages by insurance classes and policy types which is the basic start point for the model. A simple UI is built for these inputs, and the data can be inputted trough XML or Excel format.

2. Sales plan for next period based on the company strategy

Based on the marketing insights and the sales plans for the next year (number of policies, sum insured and premium per type of policy) - the sales plan can be inputted trough the software UI or through XML. If such plan does not exist yet a software build-in prediction method can be used. The future sales drive the data for the future losses, so this data is an essential input.

3. Claims stats from previous years

Insurance data from the previous years will be taken as an important parameter for the method. This data can be delivered through XML (check the XML specification) or even trough Excel.

4. Risk preferences

The user will be able to choose from different pre-built risk strategies, or create a custom one:
  • Fixed percentage of survival of the company and most profitable balance between the reinsurance cost and the return from for claims;
  • Fixed percentage of survival of the company and minimizing the expenses for claims;
  • Fixed percentage of survival of the company and minimizing the expenses for reinsurance;

Predicting the number and value of claims

We have complex scientific actuarial models for predicting the number of claims and value of each claim based on which we are building the future model.

Simulations

Based on the input data, hundredths of simulations are made and the results are depicted on a graph. Those simulations are used to generate a probabilistic environment in which the margin of error can be delivered in the desired ranges.

results_of_simulations

Results

After the simulations are run and the predictions about the future data are plugged into the software, ORM presents us with the best option regarding the selected risk preference. There is also an option for several treaties to be inputted, so the software can make predictions based on future events which would be best tailored for the insurance company needs. The software allows the company to enter different inputs and to make analysis for the future based on them. This powerful tool gives very important insight to the management, simplifies the process of choosing reinsurance treaties and allows the company management to focus on other areas of the business.