Reinsurance Programme

We managed a reinsurance procurement programme covering all product lines for a leading supplier of Life and Critical Illness cover. These policies were sold through IFAs under the insurer's own brand and, and under a different brand, through the branches of a major clearing bank.  The programme, which delivered £225m locked-in cost reduction over 5 years, comprised:

•     defining a procurement methodology, to be used for all future reinsurance purchasing

•     writing and issuing invitations to tender, exploratory discussions with reinsurers, receipt and assessment of tenders

•     Prophet modelling by the actuarial team to establish the impact of each tender on profitability

•     selection of a panel of reinsurers for each product line

•     negotiation of reinsurance treaties with each reinsurer, for each product line; this required a large number of detailed issues to be 

      resolved, with heavy exchange of snagging lists between the team and the reinsurers

While the treaty negotiations were in hand, the industry was also overhauling the definitions used in Critical Illness insurance.  The definitions to be used in these policies had all to be negotiated with the reinsurers, who would be providing 90% of the underwriting capital.  This was done primarily through teleconferences between Glasgow and London.

Every new treaty meant an IT change project, and the implementation of new underwriting procedures.  The insurer had outsourced all back office and IT functions to Capita.  We therefore handled client-side management of Capita’s delivery of process and IT change, all delivered on time and under budget.  We were very pleased with the way in which strong personal relationships were able to overcome the potential inflexibility which outsourcing arrangements can descend into in less well managed situations.

A really satisfying aspect of the work was starting with a group of talented individuals who had not done this sort of project before, and leaving behind a cool-headed set of colleagues who needed no further help.