Transcript Download Handout 1

Pierre Laurin
Reinsurance Buying Process
 Very centralized approach
 Subject to overall goals and direction
 Very formalized process
 Get our authorities from Group Reinsurance
Committee, then from ZNA’s Reinsurance Charter,
then to ZNA’s Reinsurance Sub-committee
 Security Committee
 Business Units do not have the authority to purchase
reinsurance treaties
 Very strict approved list of reinsurers
Structure of team
 Two major teams:


Marketing team
responsible to market management, internal
and external
Underwriting team
responsible for reviewing, underwriting, and
approving purchase of treaties
Marketing team
 Client relationship – Internal Clients
 General discussions on needs and objectives
of the BUs
 Data gathering
 Creation of submission, narrative
 Market the transaction and placement of treaty
 External Client
 Market management
 Broker selection, when needed
 Contact with reinsurers
Underwriting Team
 Responsible to underwrite and approve treaties
 Help design treaty structure, with regards to goals and
objectives
 Help Marketing team to put best presentation forward
 Review submission from a reinsurer’s perspective
 Underwrite program
 Participate in claims and underwriting audits
 Benchmark pricing from the actuarial team
 Set retention, inclusive of co-participation
 Help marketing in setting firm order terms and
conditions
 Design contract according to standard clauses
Placement philosophy
 Prefer Excess of Loss
 Typically, high retentions with co-participation in
upper layers
 Co-participation is preferred to eliminating layers
altogether



Keep markets involved
Allows for market pricing
More flexibility in placement
 Prefer large treaties with economy of scale with panel
of reinsurers
 Reinsurers prefer smaller treaties with targeted
portfolios, small number of reinsurers preferred
 Need to reconcile the two opposite needs.
Placement Philosophy
 Contracts



Signed within 90 days
Initial contract with submission
Final contract with firm order terms
 Two sections of contracts


Business terms
Standard clauses
Placement Process
 Total 9 month process
 180 days -> review of goals and objectives
 150 to 120 days -> data collection, loss experience and
BU underwriting reviews
 90 days -> account manager review of data, narratives,
start of building of submission, contact with markets on
goals and objectives, initial wording
 60 days -> reinsurance underwriting reviews, data
analysis and pricing benchmarking, discussions with
markets
 45 days -> submission out to market
Placement Process
 Total 9 month process (cont’d)
 30 days -> Negotiations with markets, finalization of
benchmarking, contract wording, final review of
markets against approved list
 15 days -> firm order terms with final contracts,
receive authorization, sign lines
 0 -> transaction completed
 +7 days -> internal notification, accounting systems
feed
 + 15 days -> issuance of I&Ls, premium allocation
between units
 +30 to 90 days -> contracts signed, close final issues,
take remedial action on non-performing reinsurers
Summary
 Very formalized process
 Very technical with involvement of
underwriters, actuaries, marketing, BUs
management
 Successful in achieving our goals
 Process never stops