Business Need Due to staff attrition, an operating subsidiary group of one of the top U.S. property and casualty insurers requested year-end support for its reinsurance processing and reporting.
Situation Analysis The client group consists of multiple statutory companies. Its reinsurance programs include a complex arrangement of reinsurance protections as well as inter-company pooling arrangements. The client had purchased but had not fully implemented a reinsurance accounting system. Much of the reinsurance processing and reporting continued on a manual basis, and this was prone to errors due to unclear guidelines and inaccurate reinsurance calculation and attachment. Reinsurance reporting was time consuming, as information had to be compiled from multiple sources.
Barriers Faced The client had purchased a reinsurance system but had only implemented a small portion of the total system functionality. Further, it became clear that the PC version of the system was inadequate to handle the large transaction volumes faced by the organization. The time and effort required for reporting often caused delays in day-to-day reinsurance processing. In addition, the client was not tracking open ceded recoverable balances effectively, which made account reconciliation efforts more difficult.
Paragon's Action Paragon provided the resources required to support the client's short-term needs, which were to complete year-end reporting while maintaining the day-to-day reinsurance processing. To meet the client's long-term needs, we proposed an outsource of its ceded reinsurance administration to Paragon.
The client selected Paragon to provide outsourced reinsurance administration for its active, ceded reinsurance business. Paragon prepared a detailed project plan to transition the business, convert the reinsurance data to a mainframe version of the reinsurance system, provide additional system functionality; and provide ongoing reinsurance services.
Results Paragon continues to provide complete reinsurance administration services to this client, including reinsurance claims management, reinsurance and cash accounting, and reinsurance reporting. For this client, Paragon annually processes nearly 3 million direct premium and over 600,000 direct claims transactions while managing nearly $100 million in ceded loss reserves.
Specific benefits for the customer include:
- Reduction of monthly closing cycle from 4 days to 1
- Better use of the reinsurance system and its functionality
- Automated calculation and attachment of reinsurance
- Ability to track open ceded recoverable balances
- Automatic generation of Schedules F and P
- Ability to generate interim reports to monitor results
- Improved data integrity and enhanced access to information
- Reduced IT and reinsurance resource requirements