The Past 4 Years Have Exposed the Urgency of Modernising Reinsurance Platforms (3 of 5: Manual Processing)
Blog Series 3 of 5
In our opening Whitepaper for this series, ‘Business Case for Reinsurance Administration Automation’, we discussed the two major disruptive forces that have forever changed the reinsurance market: natural catastrophes and COVID-19. These disruptive forces over such a short period of time and the staggering amount of claims and handling errors will result in a serious losses to some carriers’ bottom lines. Insurance companies are, therefore, at a critical point where modernising reinsurance platforms is the only way to stay ahead of the game.
Currently, much of the industry still manages its reinsurance activity manually and over spreadsheets. The reasons for this range from putting off the need to budget digital transformation, to fear of technology to manage very complex reinsurance programs, to the need to learn a new technical environment, among others. While the insurance industry dawdles, the world has moved on and all financial service industries have embraced digital transformation and intelligent automation.
According to a Deloitte survey, 60% of reinsurance contracts have a high level of complexity, and reinsurers are struggling to automate, resulting in even greater manual processing. Among employees, 69% gave their organisations low ratings on their ability to integrate 3rd party data, making data availability among the weak spots of the process. In addition, 50% said their company continues to use spreadsheets, further increasing manual processing and potential human error.
Most reinsurance contracts span multiple products and markets, and administering them requires data consolidation from multiple sources. Since modern technology for such consolidation has not yet been implemented in most reinsurance companies, manual processing and spreadsheets are still the only ways to collect and analyse such data.
Besides administering vast amounts of data, we all know that Excel spreadsheets lack certain other functions, such as automatic audit tracking or user tracking (relating a specific change to a particular user) which does not allow ownership or responsibility over the process.
Given the above issues, it’s a matter of time before business continuity is affected. With each user having their own personal workflow, each new user will not only have to decipher previous workflows, but they will probably add their own complications to this endless cycle.
All this manual processing is obviously prone to human error, which will be the subject of our next article.
To see how you can modernise your reinsurance platform with Sapiens, click here.
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