Twenty-five years ago, the words “Grand Canyon” could have been used to describe computer technology.
At one end of the divide, universities and the military used bulky devices with card input and tape storage. At the other end, home users could assemble kits that might provide them with a whopping 256K of memory.
The world has come a long way since then, and the insurance and reinsurance industries have been some of the key beneficiaries of the information revolution. This article will describe where technology is being used to underwrite and service excess medical reinsurance risks and will look at what the future may hold.
Technology has changed how reinsurers do business. After 256K became the size of a medium e-mail rather than the total amount of memory that a computer held, things speeded up.
Electronic commerce and Web technology are changing the way reinsurers underwrite and provide services.
Sales and marketing
Technology means that all sales and marketing materials are available online. The prospective client can perform due diligence on the reinsurer through the Website. Reinsurers can begin the sales process through written communication, followed by on-site visits with good prospects.
Technology allows the reinsurer to better understand client needs and develop consultative solutions. This proper, insightful analysis allows clients to be informed buyers of reinsurance. They can choose the right coverage within their budget. They are better able to determine what services they should reinsure, what deductible they should buy, and what internal limits and other terms and conditions are appropriate for their plan and risk tolerance level.
Pricing and underwriting
Since claim and request for proposal (RFP) information is sent to the reinsurance carrier electronically, the reinsurer underwriter is able to “slice and dice” the data to better understand the risk profile and develop the appropriate rate. Previously, the underwriter had to take hard copy information and manually create spreadsheets from such claim data. Reinsurers have a more accurate view of risk and clients are given a faster decision.