Giving reinsurance an automation reboot

If you’re working with billion-dollar contracts, you don’t want your processes to add any additional complications. That’s the score when it comes to reinsurance underwriting. However, outdated technology is, in fact, leading to errors, poor insights, the risk of increased losses — and even possible regulatory issues. 

Insurance companies have typically avoided making major investments into how their ceded reinsurance operations run. Old ways of working — like spreadsheets — have stubbornly stuck around. Set up to combat the escalation of risk, reinsurance now finds itself a cause for concern. Conversely, assumed reinsurance companies that accept these risks from insurance companies, or brokers as part of their underwriting, also face issues with inconsistent data formats or tools, which add the need for more, expensive administrative support processes.

Nowhere is this more apparent than in compliance. 

Increased operating complexity, fast-moving regulations, capital solvency rules, growing scrutiny on corporate activity: it all amounts to some very tough compliance hurdles companies have to navigate. Getting it right means building investor confidence, increasing customer trust, improving external risk rating, and shaping a positive reputation with the outside world. 

Getting it wrong, however, means fines, internal disciplinary action, and financial distress.

Technology to master complexity

With the reinsurance market expected to reach over $555 billion in 2025, both ceded and assumed reinsurance companies — as well as brokers and agents — need to seek new technological solutions if they want to stay on top of the complexity of their operations. 

Automation has emerged as a favorite amongst insurers in recent years. Using it effectively, insurers can streamline their processes to boost accuracy, efficiency, and even job satisfaction for the employees no longer wasting time on monotonous or low-value tasks. 

However, companies would do well not to jump in feet first to automation. Instead, they should take a step back and ensure they have the strategy and means to find the data that can be trusted and acted on. Getting this part right will make sure they automate only those processes that are working, and not those that are stalling progress. For the insurance industry, this is critical in order to focus on addressing the problems and not just the symptoms of complex processes.   

Real-time process overview 

To do that, (re)insurers need to invest in and implement process mining. The technology provides a real-time overview of all processes in the company and shows precisely where things might be going wrong — and how they could be improved. Since bottlenecks and costly inefficiencies are identified immediately, (re)insurers can take corrective action to improve processes right away. Now armed with a better understanding of inefficiencies, insurers can deploy targeted automation to fix the problems immediately, paving the way for better risk management and compliance.

By bringing technology into the heart of their operations, (re)insurance firms stand to deliver improved underwriting margins, lower expense ratios, and drive higher quality services throughout the policy lifecycle. And they’ll master risk and compliance like pros. 

Read more about how insurance companies can grow with Celonis – here. 

Edward Baggaley

Senior Content Marketing Manager

Edward writes for and about Celonis from London.